Ella 
During early European trading on Wednesday, USD/JPY was trading sideways in the 147.70-147.85 range. As of press time, USD/JPY was trading at 147.83, down 0.01% on the day. During the North American session on Wednesday, the market turned cautious ahead of the Federal Reserve’s (FED) key interest rate decision.
The Federal Reserve (Fed) is widely expected to keep interest rates unchanged at a range of 5.25% to 5.5%. The CME FedWatch tool shows a 99% chance that the Fed will keep rates on hold at its September meeting. However, the probability of another rate hike at the November and December meetings has diminished, according to the CME FedWatch Tool. This in turn will put pressure on the US dollar (USD).
According to Reuters, on Tuesday, U.S. Treasury Secretary Janet Yellen said that given that the economy is operating at full employment, U.S. economic growth needs to slow to a level more consistent with potential growth to Bring inflation back to target. In addition, data released by the U.S. Census Bureau on Tuesday showed that building permits in the United States increased to 1.543 million in August, higher than expected and the previous value, while housing starts fell slightly to 1.283 million.
In the Japanese yen, the market is more cautious due to concerns about foreign exchange intervention. Earlier on Wednesday, Japan’s top official in charge of foreign exchange affairs, Makoto Kanda, issued a verbal intervention to emphasize that Japanese authorities are handling foreign exchange movements with a high sense of urgency. Separately, U.S. Treasury Secretary Janet Yellen said the United States would understand Japan’s new yen-buying intervention measures and that it would “depend on the specifics” of the situation.
On Friday, the Bank of Japan will announce its interest rate decision. The Bank of Japan is widely expected to maintain its short-term interest rate target of -0.1% and its 10-year bond yield target of around 0%. Markets are eager to see whether Bank of Japan Governor Kazuo Ueda will send new signals at the post-meeting press conference on the timing of policy action and other adjustments to yield curve control (YCC).
In terms of data, the Japanese Ministry of Finance announced on Wednesday that the August trade balance was -930.5 billion yen, worse than the expected -659.1 billion yen. At the same time, the annual export rate was -0.8%, the previous value was -0.3%, which was better than the expected -1.7%. Imports increased from -13.6% to -17.8%, higher than the -19.4% forecast.
Market participants will focus on the closely watched Federal Reserve interest rate decision on Wednesday. The Bank of Japan will announce its monetary policy decision on Friday. Traders will look for USD/JPY trading opportunities from these events.
