Yen Rises Amid BoJ Rate Hike Speculation

(RTTNews) - The Japanese yen strengthened against other major currencies in the Asian session on Wednesday, as traders expect that the Bank of Japan (BoJ) may raise interest rates by the end of the year in accordance with its policy normalization path.

Meanwhile, the domestic political unpredictability and worries about the possible economic effects of additional U.S. tariffs may delay the rate hike further. The expectations of a possible peace agreement between Russia and Ukraine might cap the JPY.

In economic releases, traders look ahead to the release of the Fed minutes later in the day ahead of a key speech from Federal Reserve Chair Jerome Powell later this week.

Powell's speech on Friday morning at the Jackson Hole Symposium, an annual gathering of the world's central bankers, may indicate whether the Fed will cut its benchmark rate at the September policy meeting.

In other economic news, data from the Cabinet Office showed that the value of core machinery orders in Japan was up a seasonally adjusted 3.0 percent on month in June, coming in at 941.2 billion yen. That beat forecasts for a decline of 0.4 percent following the 0.6 percent drop in May.

On a yearly basis, core machinery orders climbed 7.6 percent - again exceeding expectations for an increase of 5.0 percent following the 4.4 percent gain in the previous month.

Data from the Ministry of Finance showed that Japan posted a merchandise trade deficit of 117.550 billion yen in July. That missed forecasts for a surplus of 196.2 billion yen following the downwardly revised 152.1-billion-yen surplus in June.

Exports were down 2.6 percent on year at 9.359 trillion-yen, missing forecasts for a fall of 2.1 percent following the 0.5 percent decline in the previous month. Imports fell an annual 7.5 percent to 9.476 trillion yen versus expectations for a drop of 10.4 percent following the upwardly revised 0.3 percent increase a month earlier.

In the Asian trading today, the yen rose to 6-day highs of 171.47 against the euro, 198.63 against the pound and 106.25 against the Canadian dollar, from yesterday's closing quotes of 171.99, 199.22 and 106.55, respectively. If the yen extends its uptrend, it is likely to find resistance around 169.00 against the euro, 197.00 against the pound and 105.00 against the loonie.

Against the U.S. dollar and the Swiss franc, the yen advances to 2-day highs of 147.42 and 182.32 from Tuesday's closing quotes of 147.47 and 182.87, respectively. The yen may test resistance around 145.00 against the greenback and 180.00 against the franc.

Looking ahead, U.S. MBA mortgage approvals data, Canada new housing price index for July and U.S. EIA crude oil data are due to be released in the New York session.

At 2:00 pm ET, U.S. FOMC minutes of its latest monetary policy meeting is set to be published.