Forex - Japanese yen trends weaker ahead of BoJ monetary policy

Investing.com - The Japanese yen trended weaker Wednesday ahead of the latest central bank board pronouncement on monetary policy with traders wary of more surprises.

USD/JPY traded at 116.92, up 0.04%, in early Asia while AUD/USD changed hands at 0.8716, down 0.02%.

The Bank of Japan's latest policy decision at the end of its two-day policy meeting, which is due around 1230 Tokyo time (0330 GMT). The BoJ is expected to stand pat on monetary policy this time after its Oct. 31 decision in a tight 5-to-4 vote to expand the aggressive easing first launched in April 2013.

BoJ Governor Haruhiko Kuroda will hold a news conference from 1530 to 1615 (0630-0715 GMT) Wednesday to discuss the board's decision.

Overnight, the dollar traded mixed to lower against most major currencies on Tuesday after an upbeat German economic sentiment report sparked demand for the euro, which prompted investors to sell the greenback for profits.

The ZEW Centre for Economic Research reported earlier that its German economic sentiment index rose by 15.1 points to a four-month high of 11.5 this month from October’s reading of -3.6.

Analysts had expected the index to improve by 4.5 points to 0.9 in November.

In addition, the index of euro zone economic sentiment increased to 11.0 in October from 4.1 in September, above expectations for an increase to 4.3, and the better-than-expected data gave the euro a shot in the arm.

The single currency has softened against the dollar in recent sessions as investors prepare for U.S. monetary policy to grow less accommodative while Europe moves in the opposite direction,

European Central Bank President Mario Draghi said on Monday that policymakers will do what it takes to bolster the European economy.

Draghi said "unconventional measures" needed to ensure recovery could involve the purchases of sovereign debt, a monetary policy tool known as quantitative easing that aims to suppress long-term borrowing costs to spur recovery, which weakens paper currencies and boosts stock prices to boost the economy.

The ECB’s current stimulus program includes purchases of asset-backed securities and covered bonds

Tuesday's economic sentiment data eclipsed an uptick in U.S. wholesale prices.

The Commerce Department reported earlier that producer prices inched up by a seasonally adjusted 0.2%, confounding forecasts for a 0.1% decline, after falling 0.1% in September.

Year-over-year, the U.S. producer price index rose at 1.5% in October, outpacing expectations for a 1.2% increase and following a gain of 1.6% in the preceding month.

The Federal Reserve pays close attention to core prices when determining monetary policy.

The US dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was flat at 87.63.

On Wednesday, the U.S. is to release data on building permits and housing starts.

Also on Wednesday, the Federal Reserve is to publish the minutes of its October meeting.