USD/JPY tilts lower for second straight session amid Fed meeting events

US dollar fluctuated lower in a narrow range during the Asian session to retreat in the third session from its highest since June 11 against the Japanese Yen. following economic developments and data released by the Japanese economy and on the threshold of an economic data release expected Wednesday by the US economy, which includes the Federal Reserve monetary policymakers' decisions and directions.

As of 06:08 GMT, USD/JPY fell by 0.14% to 108.30, compared to the opening levels at 108.45, after reaching the lowest level at 108.29, while the highest at 108.62.

We followed the Japanese economy, the world's third-largest economy, release its reading for the trade balance index, which showed a deficit of 60 billion yen against a surplus of 56.8 billion yen in April, exceeding expectations of a deficit of 1,200 billion yen, while the seasonally adjusted index showed the same index widening Deficit to 609 billion yen against 170 billion yen in April, also surpassing expectations of a deficit to 807 billion yen.

The annual reading of exports showed a decline of 7.8% compared to 2.4% in the previous reading for April, better than expectations of a wide decline to 8.4%, while the annual import reading showed a decline of 1.5% compared with 6.5% in the previous reading for April, worse than expectations for a slowdown in growth to 1.0%.

This comes hours after Japanese central bank governor Haruhiko Kuroda yesterday expressed a high uncertainty about the global economic outlook, explaining that the global economic developments will be discussed at the Bank of Japan's review of short-term interest rates starting today and Thursday in Tokyo, adding that the Bank of Japan Will discuss the risk of trade tensions between the United States and China and Britain's exit from the EU.

On the other hand, Investors are anticipating the FOMC meeting decision, where interest rates are expected to remain between 2.25% and 2.50%, as markets look for a reveal of the committee forecasts for growth, inflation and unemployment as well as the future interest rates for the next three years ahead of Fed Chairman Jerome Powell's upcoming press conference later in the day.

We would like to point out that US Federal Reserve Governor Paul Powell recently expressed his belief that the Fed does not know how and when trade tensions will be resolved, considering that the Federal Commission takes inflationary pressures impacts seriously for an extended period which may affect the committee's inflation forecasts later, which boosted prospects that the Federal Reserve will abandon its policy of patience and reduce interest on federal funds in the coming period.