Investing.com - The Japanese yen gained in Asia on on Wednesday after disappointing trade data and ahead of a highly-anticipated central bank board meeting announcement seen as crucial for policy clarity.
USD/JPY changed hands at 101.52, down 0.18%, while AUD/USD traded at 0.7559, up 0.04%.
The Bank of Japan policy meeting results on Wednesday could see crucial changes to its easing program that include a possible interest rate cut deeper into negative territory, tweaks to its asset-purchase program or new rules on the duration of securities it will purchase in the bond market.
The BoJ has already implemented negative interest rates on some bank holdings and is printing ¥80 trillion ($750 billion) a year to stimulate inflation after decades of deflation and stagnant growth, yet inflationary expectations appear to be weakening.
Japan reported a trade balance deficit of ¥19 billion for August, widely missing an expected surplus of ¥202 billion, with imports down 17.3%, just shy of the 17.8% drop seen, and exports slumping 9.6%, compared to a 4.8% decline year-on-year expected.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last quoted at 95.97, up 0.19%.
Overnight, the dollar held steady against the other major currencies in subdued trade on Tuesday, after the release of downbeat U.S. housing sector data as investors remained cautious ahead of the Federal Reserve and Bank of Japan’s policy statements due on Wednesday.
The U.S. Commerce Department said housing starts dropped 5.8% to 1.142 million units last month from July’s total of 1.212 million units. Analysts had expected a decline of 1.7% in August.
Meanwhile, the number of building permits issued declined 0.4% to 1.139 million units from 1.144 million. Economists had forecast a 2.5% rise to 1.170 million units in August.
Investors remained cautious with the U.S. dollar ahead of the Fed’s monthly policy meeting, set to begin later Tuesday, amid ongoing uncertainty over a possible rate hike. Investing.com's Fed Rate Monitor Tool shows a 15% market expectation for a rate hike.