USD/JPY preserves gains after Japanese industrial report, FOMC meeting ahead

US dollar traded higher against the Japanese yen on Wednesday, after Japans industrial production climbed below expectations and amid speculation that the Federal Reserve Bank will probably maintain the pace of its stimulus after the policy meeting is concluded today.

USD/JPY reached a session high at 98.27 at 0:55 GMT, after which consolidation followed at 98.23, gaining 0.05% for the day. Support was likely to be received at October 7th low, 96.66, while resistance was to be encountered at October 22nd high, 98.48.

Today Japans Ministry of Economy, Trade and Industry said that nations industrial production rose 1.5% in September on a monthly basis, following the 0.9% drop a month ago, while experts had anticipated a 1.8% increase. Annual industrial output grew 5.4% in September, again below expectations of a 5.6% gain, while in August production fell 0.4%. Crucial factors behind this result have been the sector of transportation equipment and the manufacturing of electronic components and devices. Manufacturers project that this tendency of improving output will continue also in October, with production seen rising 4.7%. In a previous survey their median estimate pointed a 2.5% gain in October. However, in November industrial output may decrease 1.2%.

This report came one day after the Statistic Bureau said, that the rate of unemployment in the country decreased to 4.0% in September, meeting projections, after a month ago it stood at 4.1%.

A separate report revealed yesterday that household spending rose 3.7% in September on annual basis, marking the largest gain in the past six months, considerably above the expected 0.5% climb, after in August spending dropped 1.6%.

At the same time, Japanese central bank is expected to release updated forecasts on economic growth and inflation, following its meeting on Thursday. Experts project that Bank of Japans asset purchases of more than 7 trillion JPY (71 billion USD) per month of government bonds will remain unchanged. The Sankei newspaper imparted that the central bank will probably revise up its Gross Domestic Product forecast for 2014, as the media did not cite the source of this information.

Meanwhile, market players began focusing on the outcome of Feds two-day policy meeting, as it is expected that no changes in stimulus will be introduced this month. The central bank will likely reduce the current scale of its asset purchases at its meeting in March next year, according to a survey of economists conducted by Bloomberg on October 17th-18th. Federal Reserve policymakers abstained from trimming the pace of stimulus in September, as more evidence that US economy is indeed recovering was to be obtained.

US companies operating in the private sector probably added 148 000 new jobs in October, after 166 000 new positions in September, according to the median estimate of economists participated in another survey by Bloomberg News. The ADP Research Institute will release the official figures today.

Later on trading Wednesday, the United States will also release data on the index of consumer prices, as it is projected that the index will gain 0.2% in September, after the 0.1% uptick in August. A larger climb rate will certainly provide support to the greenback.

Elsewhere, the yen was steady against the euro, with EUR/JPY cross rising a mere 0.01% on a daily basis to trade at 135.04 at 6:52 GMT. GBP/JPY pair was also little changed, up 0.03% to trade at 157.67 at 6:53 GMT. Ultimately, USD/JPY pair is seen advancing to 100.00 by some experts at the end of this year.