Motoo Hayashi acting secretary of Japanese Liberal Democratic Party said today that current USD/JPY rates are becoming difficult for exporters and noted that government should consider steps to weaken yen further. Over the past several days USD/JPY has continued to drift lower breaking below the 82.00 barrier in yesterday's North American trade as US yields continued to contract putting downward pressure on the pair. Although the latest US economic data has continued to show steady improvement with yesterday's US consumer confidence report reaching an eight month high investors remain convinced that the Fed will maintain its aggressive ultra-accomodative monetary policy for the foreseeable future keeping US rates relatively low. Rates on the benchmark 10 year bond have dropped below the 3.5% level since the start of the year despite signs of accelerating US economic activity. This dynamic has weighed heavy on USD/JPY prompting more calls for intervention from Japanese fiscal officials such as Mr. Hayashi. Today's FOMC statement could prove critical in setting the near term direction for the pair. Although few market participants anticipate any dramatic change from the communique traders will be watching carefully for any hint that the Fed has upgraded its assessment of the US economy. If US monetary officials signal a more hawkish posture, USD/JPY could catch a bid in late North American session trading back towards the 83.00 level much to the relief of Japanese fiscal authorities

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