Strong wait-and-see sentiment! Japanese yen options trading volume hits monthly low, investors await signals from Japan and the US.

The trading volume of USD/JPY options has been continuously shrinking, currently hitting a one-month low, as investors are waiting for the policy decision announced by the Bank of Japan on Thursday to gain relevant clues about the trend of this currency pair. Data from the Depository Trust & Clearing Corporation (DTCC) shows that trading volume on Monday was the lowest of the month, with no significant improvement on Tuesday. This phenomenon indicates limited market interest in trading the most liquid currency pair globally. In addition, the trend of this currency pair will also be influenced by the policy decision announced by the Federal Reserve on Wednesday evening Eastern Time. "The USD/JPY exchange rate has been unable to break through the level of 153.30. Only by surpassing this level, the exchange rate may gain upward momentum," said Antony Foster, Head of G10 Currency Spot Trading at Nomura Securities London branch. The recent high point of this currency pair has been capped at 153.27, and at the time of writing, the exchange rate is at 152.28, essentially unchanged from previous levels. Since earlier this month, when Kishida Fumio won the Liberal Democratic Party leadership election, paving the way for him to become the next Prime Minister of Japan, the yen has been fluctuating within a range against the US dollar. Expectations of Kishida Fumio possibly implementing loose fiscal policies after his election and speculation that the Bank of Japan may slow down its rate hikes have led to a weakening of the yen. However, safe-haven buying resulting from tensions in US-China trade relations has limited the depreciation of the yen. Although most economists expect the Bank of Japan to maintain interest rates unchanged at its first meeting under the Kishida Fumio government, the market will still carefully examine this decision to find clues about the central bank's next steps. "Currently, the market sentiment towards the USD/JPY is cautious rather than aggressive," said Ivan Stamenovic, Head of G10 Foreign Exchange Trading in the Asia-Pacific region at Bank of America.