USD/JPY stuck in tight daily range near 109.60 amid thin trading conditions

The USD/JPY pair is trading in an extremely tight 25 pip range on Monday as thin trading conditions don't allow the pair to make a decisive move in either direction. As of writing, the pair was trading at 109.63, losing 12 pips on the day.

Important macroeconomic data releases from China on Monday failed to make significant changes in the markets' risk perception on Monda. Although the industrial production in China expanded more than expected in 2018, the annual GDP growth rate fell to 6.4% in the fourth quarter as expected. Japan's Nikkei closed the day modestly higher and major European indices painted a mixed picture with Germany's DAX erasing 0.6% and the UK's FTSE staying flat on the day despite ongoing uncertainty surrounding Brexit talks in the UK.

The US Dollar Index, meanwhile, stays calm above the 96 mark on Monday as investors wait for the bond market to return to action on Tuesday.

In the early trading hours of the Asian session on Wednesday, the Bank of Japan will announce its policy rate, which is expected to stay unchanged at -0.1%, and publish its policy statement. Previewing the event, "Given this is a quarterly outlook meeting, it will be what the BoJ does with its forecasts and how it talks to both the domestic and international issues the economy faces. Increasing downside risks to inflation and growth present a challenge to the BOJ,” noted Westpac analysts in a recently published report.

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