USD/JPY: Japanese Yen awaits fresh impulse from the Fed and trade talks
|- The USD/JPY trades in mid 109.00s ahead of the US Federal Open Market Committee (FOMC) monetary policy meeting and US-China trade talks.
- The US Federal Reserve isn't expected to alter present monetary policy but weigh on recent "patience" calls and possibly balance sheet reduction.
- China could respect demand to increase the US import against likely turning down calls for restructuring the economy and IPR protection.
The Japanese Yen is trading little changed near 109.45 against the US Dollar on Wednesday around noon in London as global investors eagerly await the Federal Reserve Chairman Jerome Powell's press conference. Powell is expected to confirm data dependency in Fed's rate-hike trajectory. The Fed is widely expected to offer no change in its present monetary policy.
The beginning of two-day trade talk between the US and China are also on the trader's radar. Amid signs that Trump Administration's demand for structural reforms and strict investors property rights (IPR) protection could hinder the progress. Chinese delegation including President's top aide Liu He will meet the US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Wednesday and Thursday.
In light of the latest calls for ¨patience¨ in future monetary policy path, the Fed might refrain from supporting its earlier view that required "further" policy normalization. The Fed is expected to voice its data dependency instead as recent negative data and absence of few statistics due to the US government shutdown.
At the trade front, the US allegations on China's smartphone giant Huawei can spoil the start as Chinese foreign ministry remains firm to protect the interest of their companies. Additionally, the US demands for restructuring of world's second largest economy to best suit the overseas firms might also hinder the path of progress. On the positive side, China's readiness to import more of the US productions could be beneficial.
With both the scheduled events less likely to offer any positive signs, the JPY may rise due to its safe-haven appeal.
USD/JPY: Four hourly chart
The USD/JPY confirms short-term "Rising Wedge" break and opens the door for the pair's dip to 108.70 and then to the 108.00 before highlighting the 107.70 rest-point. Given the quote's extended downturn under 107.70, the theoretical target of the bearish formation break near 107.00 can gain market attention.
On the upside, the 109.90-110.00 area including recent highs could challenge the pair's rise towards the 110.30 level comprising 61.8% Fibonacci retracement of its latest decline. In case prices rally past-110.30, the 111.40-45 horizontal-region may appear on buyers' radar.
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