Anna 
In the Asian session on Wednesday, the USD/JPY currency pair traded around 151.20, marking a decline from its annual high following the Bank of Japan’s (BoJ) decision to lift its 1% cap on the 10-year government bond yield on Tuesday.
The shift in the bond yield control curve policy was accompanied by a clear dovish stance from Bank of Japan Governor Kazuo Ueda. Ueda expressed concerns regarding the attainment of the Bank of Japan’s long-term inflation targets.
Japan’s Chief Cabinet Secretary Hirokazu Matsuno also intervened verbally to support the yen. Matsuno stressed the significance of maintaining stable currency movements that align with economic fundamentals. He expressed dissatisfaction with rapid fluctuations in exchange rates. While Matsuno did not specify particular foreign exchange rate levels, he did not rule out the possibility of implementing measures to address disorderly exchange rate movements.
Furthermore, the latest data released on Wednesday revealed that China’s Caixin Manufacturing Purchasing Managers’ Index (PMI) for October unexpectedly dropped to 49.5, slipping below the previous reading of 50.6, which had indicated expansion. This added pressure to the Japanese yen (JPY).
The U.S. dollar index (DXY) witnessed a two-day consecutive rise, supported by increasing U.S. bond yields. At the time of reporting, the index was trading at approximately 106.70. Additionally, market expectations surrounding an imminent Federal Reserve policy decision suggested that the Fed would maintain the status quo at its meeting on Wednesday.
Investors were closely monitoring the Federal Reserve’s statements following the interest rate meeting, seeking signals that could offer insights into the potential trajectory of interest rates. The anticipation that the Federal Reserve might base its interest rate policy for December on economic data added to expectations of increased market volatility.
Traders were also keeping a close eye on key indicators such as the U.S. ADP employment change for October and the ISM Manufacturing PMI during the U.S. trading session.
