The Japanese Yen (JPY) struggled to build on the previous day's modest recovery against its US counterpart and attracted fresh sellers during the Asian session on Wednesday. Data released today showed that Japan's Trade Balance unexpectedly improved in November on strong export growth, although a decline in imports indicated weak local demand. This, coupled with an uncertain economic outlook amid concerns about US President-elect Donald Trump's tariff plans, reaffirmed expectations that the Bank of Japan (BOJ) will keep interest rates steady later this week and weakened the JPY.

Meanwhile, a less dovish outlook from the Federal Reserve (Fed), coupled with expectations that Trump's policies could lead to increased government borrowing and boost inflation, continued to support the rise in US Treasury bond yields. This turned out to be another factor weighing on the lower-yielding JPY, although a softer risk tone helped limit deeper losses. JPY market players might also refrain from placing aggressive bets and prefer to wait on the sidelines ahead of the key risk from central bank events. The Fed will announce its decision at the end of a two-day meeting today, followed by the BOJ's monetary policy update on Thursday.

Source: FXStreet