Forex - USD/JPY steady as BoJ meeting starts

The U.S. dollar traded modestly lower against the Japanese yen during Wednesday’s Asian session as the Bank of Japan commenced another two-day policy meeting. 

In Asian trading Wednesday, USD/JPY inched down 0.01% to 101.15 after earlier trading as high as 101.22. The pair was likely to find resistance at 101.54, and support at 99.26, Wednesday's low. 

Earlier Wednesday, the Bank of Japan said that Japan’s corporate goods price index rose 1.2% last month following a 0.6% increase in May. Analysts expected the 1.2% increase. 

In a separate report, METI said that Japanese tertiary industry activity index rose 1.2% in June after a flat reading in May. Analysts had expected Japanese tertiary industry activity index to rise 0.9% last month. 

Ahead of the BoJ meeting, seven of 20 economists surveyed by Bloomberg said they expect BoJ to expand its monetary easing efforts later this year. BoJ announced a USD1.4 trillion stimulus program in April, but with upper house elections looming later this month, Prime Minister Shinzo Abe could press the central bank for additional easing. 

It is widely expected that Abe’s Liberal Democratic Party will take control of Japan’s upper house of parliament. However, traders also believe that if Abe is unsuccessful in pushing through more economic recovery initiatives, BoJ could step into the rescue by announcing added stimulus.

Following BoJ’s major April announcement, subsequent meetings of the central bank have provided little in the way of fireworks and it appears traders expect that will remain the case this week. 

Elsewhere, EUR/JPY inched down 0.05% to 129.25 while AUD/JPYnudged up 0.01% to 92.86.