At the conclusion of its two-day meeting, the BOJ is expected to say it will make negative interest rates the centerpiece of a new policy framework.
The central bank might consider deepening negative rates to show its determination to maintain an ultra-easy policy bias, though whether to deploy one of its dwindling options so soon would be a close call, sources close to the BOJ have said.
"Bolder, more aggressive, action is needed to put a top in the yen and a bottom in USD/JPY but the chance of that happening is slim and we believe that at the end of the BOJ meeting, investors will be disappointed," Kathy Lien, managing director at BK Asset Management, said in a note.
Ministry of Finance data released earlier on Wednesday showed Japan's exports fell 9.6 percent in August from a year earlier, posting an 11th straight month of decline.
The dollar edged down 0.1 percent to 101.63 yen, treading water in this week's narrow range between Monday's high of 102.42 and this morning's low of 101.49.
The euro was flat at 113.38 yen after earlier touching 113.23, its lowest since Aug. 26. Against the dollar, the European unit was steady at $1.1152.
After the BOJ decision, investors' attention will quickly shift to the Fed. The U.S. central bank is widely expected to hold interest rates unchanged at 0.25 percent to 0.50 percent, and could hint at a rate hike by the end of the year.
Weaker-than-expected U.S. economic data has prompted investors to all but erase their bets that the Fed would raise rates on Wednesday.
On Tuesday, data showed US housing starts fell more than expected in August as building activity declined broadly after two straight months of solid increases.
The British pound steadied after tumbling in the previous session, extending its losses after head of Germany's Bundesbank warned on Monday that banks based in Britain could lose "passporting" access to EU markets after Britain's pending exit from the European Union.
Sterling was down slightly on the day at $1.2982 after skidding to $1.2947 on Tuesday, its lowest since Aug. 16.
source: www.abs-cbnnews.com
