FX Action: USD-JPY has drifted moderately lower
FX Action: USD-JPY has drifted moderately lower, to levels around 108.35 after scaling intraday highs just above 108.60 earlier in Tokyo trading. The dip reflects a pick up in demand for the yen, which has also seen EUR-JPY and AUD-JPY drift back from intraday highs. Overall, directional impulse has been limited in forex markets with participants hunkered down ahead of the Fed policy announcement later on Wednesday. The U.S. 10-year yield posted the lowest close yesterday since September 2017 at 2.016% amid anticipation for the Fed to signal a rate cut as soon as the FOMC in late July. Wall Street closed solidly higher, too, while the MSCI Asia-Pacific (ex-Japan) index rallied by over 1.5% in printing a five-week high earlier. The dovish about-turn by ECB's Draghi yesterday has been in the mix of sentiment drivers, as has news that President Trump will be meeting with President Xi at the upcoming G20, and that ministerial-level trade negotiations will be recommencing. All eyes will be on the Fed, where there is risk of disappointment given the level of expectation for a strong dovish guidance. USD-JPY is presently sitting near the midway of a choppy sideways range that's been unfolding for nearly three weeks now. The range over this time has been 107.81 - 108.80. Support comes in at 108.00-06.