The pair USD/JPY pair has been trading in the range of 107.84 - 106.00 for a week.
Yesterday's BSI Large Manufacturing Conditions showed -11.1 vs. the forecast of -2.1.
The Chinese data also pressured the Japanese yen. In China, the retail sales decreased from 10.1% to 10.0% y/y. The industrial production showed zero growth at the forecast of 6.0%.
Today the Japanese Nikkei225 has lost 1.05%. The industrial production data showed 0.5% against the forecast of 0.4%. The capacity utilization coefficient lost 1.0%. After this news, the Nikkei225 jumped by 0.45%.
The Japanese yen is waiting for the US data. In May, the retail sales are projected to grow by 0.3% against the previous 1.3%. The core retail sales: 0.4% after 0.8% in April. The import price index is expected to grow by 0.7% vs. 0.3% last month. All these indicators directly affect the GDP and may cause the revision of the forecast for the 2nd quarter, which stands at 2.5% now.
But traders are unlikely to trade actively before the Fed decision. So, we expect the sideways moving.
How to trade
We would buy put options if the pair USD/JPY falls below 105.55. In this case, we expect the movement to the level of 105.20. We would buy call options if the pair rises above 106.35.
Expiry time: 20:00 GMT