The U.S. dollar and the Japanese yen declined against their major counterparts in the European session on Friday, as easing worries about U.S.-China trade spat following the two countries agreeing on a phase one trade deal reduced the appeal of safe-haven assets.

After two countries reached an agreement in principle, a phase one trade deal is set to be signed sometime in January.

Investors digested China's statement that it was in close contact with the U.S. on signing the initial trade pact.

That came after U.S. President Donald Trump signaled a signing ceremony with Chinese leader Xi Jinping for the Phase 1 trade deal.

On the economic front, the Ministry of Economy, Trade and Industry said in a preliminary reading that industrial production in Japan was down a seasonally adjusted 0.9 percent on month in November. That exceeded expectations for a decline of 1.1 percent following the 4.5 percent drop in October.

The jobless rate in Japan came in at a seasonally adjusted 2.2 percent in November. That was shy of expectations for 2.4 percent, which would have been unchanged from the October reading.

Retail sales in Japan were up a seasonally adjusted 4.5 percent on month in November. That was shy of expectations for an increase of 5.0 percent following the 14.2 percent plunge in October.

Overall consumer prices in the Tokyo area were up 0.9 percent on year in December. That was in line with expectations and up from 0.8 percent in November.

Core CPI, which excludes volatile food prices, climbed an annual 0.8 percent - exceeding expectations for 0.6 percent, which would have been unchanged from the previous month.

The Japanese currency depreciated to an 8-day low of 143.27 against the pound, near 1-year low of 112.28 against the franc and a 9-day low of 122.08 against the euro, off its early highs of 142.05, 111.67 and 121.60, respectively. The next possible support for the yen is seen around 146.00 against the pound, 114.00 against the franc and 124.00 against the euro.

Pulling away from its early highs of 73.01 against the kiwi and 76.03 against the aussie, the yen slipped to more than a 5-month low of 73.24 and near a 6-month low of 76.21, respectively. The yen is likely to challenge support around 76.00 against the kiwi and 79.00 against the aussie.

The yen weakened to 83.62 against the loonie, after rising to 83.46 at 7:45 pm ET. On the downside, 85.00 is possibly found as the next support level for the yen.

The greenback declined to a 1-week low of 1.3075 against the pound, 8-day low of 1.1142 against the euro and a new 4-month low of 0.9763 against the franc, from its early highs of 1.2968, 1.1094 and 0.9818, respectively. If the greenback slides further, it may find support around 1.33 against the pound, 1.13 against the euro and 0.96 against the franc.

The greenback reversed from its early highs of 1.3121 against the loonie, 0.6941 against the aussie and 0.6666 against the kiwi, dropping to near a 2-month low of 1.3100, more than 5-month lows of 0.6959 and 0.6689, respectively. The greenback is seen locating support around 1.28 against the loonie, 0.71 against the aussie and 0.68 against the kiwi.

In contrast, the greenback-yen pair fluctuated in the midpoint of the 109 area, after weakening to 109.43 at 7:45 pm ET. The pair had ended Thursday's trading at 109.62.

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