Japan prepared to act on Yen if needed

Japan's top currency official, Masato Kanda, has expressed his readiness to intervene in the foreign exchange market if deemed necessary. These remarks have led to an upswing in the currency's value, which had recently been hovering around its lowest levels for the year. Kanda also voiced concerns regarding certain market movements that appear to deviate from fundamental economic factors, especially rapid and unpredictable fluctuations. On Tuesday, the yen experienced its most significant single-day decline since April, creating a stir in financial markets.

However, despite a brief respite for the yen on Wednesday, there remains a longer-term trend of depreciation, with the currency inching closer to the 152 threshold. This is reminiscent of a scenario from a year ago when Japanese authorities were compelled to step in and provide support to the yen, responding to a sudden and substantial depreciation of over two yen in less than a day. This episode resulted in Japan's intervention to the tune of over $60 billion to purchase its own currency in the foreign exchange markets. Additionally, the yen reached its lowest exchange rate against the euro since 2008 on Tuesday.

Finance ministry data released on Tuesday revealed that no interventions were conducted in the currency market between September 28 and October 27. This time frame includes October 3 when the yen's decline to 150.16 abruptly reversed to 147.43. This reversal prompted market speculation that Japan might have intervened to stabilize the yen's value.

Consumer confidence wanes, home prices ascend

In other economic news, consumer confidence took a hit, reaching a five-month low in October. Simultaneously, home prices surged to a new high in August. Unexpectedly, there was an acceleration in the employment cost index, which rose to 1.1% in the last quarter.

Pausing from Fed

Regarding the Federal Reserve's actions, it is widely anticipated that the Fed will maintain its current stance for a second consecutive meeting while retaining its tightening bias. In the lead-up to this decision, investors will closely scrutinize the Treasury's quarterly funding announcement. With projections of soaring deficits, the plan may include increases in the sizes of most auctions.

US job market insights and manufacturing standstill

On the economic calendar, the forthcoming ADP data may indicate that employers added approximately 150,000 positions last month. Concurrently, JOLTS data may reveal a decline in job openings for the month of September. Additionally, the ISM manufacturing gauge for October is expected to remain unchanged, providing further insights into the state of the manufacturing sector.