The Japanese yen was the top loser of Wednesday’s Asian session, falling sharply against the dollar and sterling, on expectations of BOJ’s further monetary policy easing and amid reports that the Japanese government will soon unveil a massive stimulus package.
According to various media reports that quoted Japanese PM Shinzo Abe, the package could be worth $265 billion, which shows bigger amount compared to previously announced figure of $189 billion.
Yen traded in a choppy mode after initially spiking to session low at 106.52 against dollar and 139.87 British pound.
Market participants are focusing BOJ’s policy decision, due on Friday, with expectation of more easing measures that include deepening negative interest rates and increase of riskier assets purchase, stocks and government bonds.
Fed is ending its FOMC two-day policy meeting today and traders are awaiting hints of central bank’s possible steps in the near future. With widely expected unchanged policy on today’s release, market participants see possibility of rate raise by the end of the year, with idea being supported by positive recent US economic data.
Australian dollar slipped during Asian session, erasing all gains from Tuesday, pressured by subdued inflation data that left the door open for a rate cut next week. Aussie fell sharply from session high at 0.7563 to 0.7455 low.
Another antipodean currency, Kiwi dollar, was dragged by Aussie’s fresh weakness and returned back to 0.7000 support, after recovery action after seven-day fall stalled at 0.7084.
Crude oil remains under pressure, facing strong headwinds from oversupply and slowing global economic growth. US Oil price hit fresh nearly 3-month low at $42.35, on seven-day fall that signal further easing. Next technical support lies at $41.87, with psychological $40 level, last traded in mid-April, coming in near-term focus.
Traders are awaiting today’s EIA weekly crude inventories report, which is forecasted for another draw in crude stocks.
Highlights of the day
Calendar for Wednesday is busy, compared to two previous days, with a number of significant releases.
Asia
Australian inflation data were the top release of the session. Q2 CPI came along with forecast at 0.4% on Q/Q, while y/y release fell to 1.0% in Q2, failing to meet the forecast at 1.1% and being well below Q1 release at 1.3%.
This gives strong signals for Australian central bank for easing in their meeting due next week.
Europe
Focus is at UK’s second quarter GDP data, due at 08:30 GMT. Post-Brexit period showed a lot of negative headlines, with last week’s PMI data that increased worries of contraction of UK economy. However, today’s forecast for Q/Q growth remains unchanged at 0.4%, as well as Y/Y release, seen unchanged at 2.0%

America
US Durable Gods data are the first to be released on American session at 12:30 GMT. Forecast for June shows improvement from May’s -2.3%, on –1.1% consensus, which still holds in the negative territory.
Core Durable Goods are forecasted at 0.3% in June, from -0.3% in May.
US Pending Home Sales show improvement according to June’s forecast at 1.4%, compared to -2.3% in may. Data are due at 14:00.
US EIA weekly crude inventories are due at 14:30 GMT, with forecasted draw of 2.25 million barrels last week, slightly below previous week’s 2.34 million barrels draw.
FOMC rate decision and the statement are due to be released at 18:00 GMT. As previously mentioned, no changes are expected on July’s meeting, but traders are awaiting signal for subsequent meetings, with expectations that Fed would take any action until December.
Important levels
USDJPY
The pair spiked to 106.52 high and retested strong daily cloud base barrier, after reversing all yesterday’s losses that dipped to 103.98. Near-term focus is shifting higher again, however, sustain break above daily cloud base (currently at 106.44), required to confirm bullish action.
Initial support lies at 105.08, followed by 104.59 and yesterday’s low at 103.98.
At the upside, cracked daily Tenkan-sen offers initial resistance at 105.72, followed by daily cloud base breakpoint.
EURUSD
The Euro holds below 1.1000 handle, following Tuesday’s failure to sustain break higher, but also unable to clear lower pivot at 1.0950. The pair is awaiting today’s FOMC release for more clues about near-term direction.
Psychological 1.1000 figure marks initial resistance, followed by yesterday’s high at 1.1028 and 20SMA at 1.1055, which guards 200SMA breakpoint at 1.1075.
Immediate support lies at 1.0977, followed by 1.0950 and key 1.0909 support, post-Brexit low.
GBPUSD

The pair remains in directionless near-term mode, signaled by double-Doji candles and Wednesday’s trading being so far entrenched with narrow range.
To define fresh direction, break out of near-term 1.3055/1.3173 congestion is required. Overall structure remains bearish.
Initial resistance lies at 1.3173, followed by 1.3200 and 1.3267/88 pivots. On the downside, session low at 1.3102 marks immediate support, ahead of congestion floor / pivot at 1.3055 and psychological 1.3000 support., Market Analysis