Japanese Yen is on the back foot ahead of key central bank event risks
The Japanese Yen (JPY) struggled to capitalize on the previous day's modest recovery gains against its American counterpart and attracted fresh sellers during the Asian session on Wednesday. Data released earlier today showed that Japan's Trade Balance unexpectedly improved in November on the back of strong growth in exports, although a fall in imports pointed to a weak local demand. This, along with the uncertain economic outlook amid concerns about US President-elect Donald Trump's tariff plans, reaffirms expectations that the Bank of Japan (BoJ) will keep interest rates steady later this week and undermines the JPY.
Meanwhile, the prospects for a less dovish Federal Reserve (Fed), along with expectations that Trump's policies may lead to an increase in government borrowing and boost inflation, remain supportive of elevated US Treasury bond yields. This turns out to be another factor weighing on the lower-yielding JPY, although a softer risk tone helps limit deeper losses. The JPY bears might also refrain from placing aggressive bets and opt to wait on the sidelines ahead of the key central bank event risks. The Fed will announce its decision at the end of a two-day meeting later today, followed by the BOJ monetary policy update on Thursday.
Source : FXStreet
