Forexpros - The U.S. dollar added to losses against the yen in thin, post-holiday trade on Wednesday, as a successful Italian bond auction failed to ease concerns over the debt crisis in the euro zone ahead of a ten-year debt sale on Thursday. USD/JPY hit 77.57 during European afternoon trade, the pair’s lowest since December 12; the pair subsequently consolidated at 77.58, falling 0.38%. The pair was likely to find short-term support at 77.48, the low of December 9 and resistance at 78.02, the previous day’s high. With most investors already away on year-end leave, trading volumes were thin, resulting in tight liquidity conditions and irregular volatility. Italy’s Treasury sold EUR9 billion of six-month bills, at an average yield of 3.25%, down from a record-high 6.50% in a previous auction in November. The country also sold EUR1.73 billion of two-year zero-coupons at a 5% yield. Following the auction, the yield on Italy’s 10-year bonds traded at 6.86%, hovering below the 7% threshold widely seen as unsustainable in the long-term. Despite the upbeat results, Thursday’s sale of EUR8.5 billion of long-term Italian debt maturing between 2014 and 2022 was seen as a bigger test of market confidence in the country’s sovereign debt. Also Wednesday, Japan’s government warned that will not change its stance on taking appropriate action in the foreign exchange market as needed. The comments came after the U.S. criticized the country for intervening in order to stem the yen’s appreciation against the greenback. Elsewhere, the yen was also higher against the euro with EUR/JPY declining 0.39%, to trade at 101.39. In Japan, preliminary data showed earlier that industrial production fell more-than-expected in November, tumbling 2.6% after a 2.2% rise the previous month. Analysts had expected industrial production to fall 0.7% in November. Separate reports showed that Japan’s retail sales declined more-than-expected in November, falling 2.3%, while household spending slumped far more-than-expected by 3.2% in December. Meanwhile Japanese core inflation rates came in better than expected, hitting minus 0.3% compared with forecasts for minus 0.4%.

Source