The Japanese yen climbed against its major counterparts in the European session on Wednesday, ahead of the Bank of Japan's policy decision due tomorrow, which is expected to keep its rates and yield-curve policy unchanged.
The BoJ is likely keep rates steady at -0.1 percent and target the yield of 10-year government bonds at around zero percent.
The central bank targets to purchase government bonds so that the balance of its holdings increases at an annual pace of 80 trillion yen.
Investors remained cautious ahead of the monetary policy outcome from the U.S. Federal Reserve and the Dutch election vote today.
Analysts think the U.S. Federal Reserve will raise interest rates later on Wednesday, but there is much uncertainty about the outlook for further tightening. It is hoped that Fed Chair Janet Yellen will shed some light at her press conference following the decision.
Figures from the Ministry of Economy, Trade and Industry showed that Japan's industrial production declined less than initially estimated in January.
Industrial production fell 0.4 percent month-over-month in January instead of a 0.8 percent drop estimated earlier. It was the first decline in six months.
The yen has been trading in a positive territory in the Asian session, with the exception of the pound.
In European trading, the Japanese yen rose back to 121.75 against the euro, from an early low of 122.02. The yen had already set a 5-day high of 121.64 early in the Asian session. On the upside, the yen may find resistance around the 120.00 mark.
European Central Bank Executive Board member Peter Praet said that euro area inflation is being driven by energy and food prices and underlying price pressures remain subdued, implying that there was no need for a change in the current monetary policy stance.
"Looking through recent volatility, the inflation outlook does not at this stage warrant a reassessment of the current monetary policy stance," Praet said in a panel discussion at the G-20 conference in Frankfurt.
Reversing from an early low of 114.88 against the greenback, the yen edged up to 114.58. If the yen extends rise, it may locate resistance around the 112.00 zone.
The yen rebounded to 113.58 against the Swiss franc, from a low of 113.86 hit at 11:00 pm ET. This may be compared to a 2-day high of 113.41 hit at the beginning of today's trading. The next possible resistance for the yen is seen around the 111.00 level.
The yen reversed from an early near a 2-week low of 140.60 against the pound, edging higher to 139.78. The yen is seen finding resistance around the 136.00 region.
Data from the Office for National Statistics showed that the UK jobless rate fell to the lowest level since 1975 at the start of the year.
The ILO unemployment rate came in at 4.7 percent in three months to January versus 5.1 percent seen a year earlier.
The yen was trading higher at 85.19 against the loonie and 79.54 against the kiwi, up from an early low of 85.32 and a 5-day low of 79.70, respectively. Further gains may take the yen to resistance levels of around 84.00 against the loonie and 78.00 against the kiwi.
Looking ahead, New York Fed's empire manufacturing data for March, U.S. consumer price index and retail sales for February, NAHB housing market index for March and business inventories for January, as well as Canada existing home sales for February are due in the New York session.
by RTT Staff Writer