The Japanese yen has ticked lower in the Wednesday session. In North American trade, USD/JPY is trading at 110.50, down 0.08% on the day. U.S banks and stock markets are closed for the Fourth of July and there are no U.S events. The sole Japanese event is the 30-year bond auction. On Thursday, the U.S releases ADP nonfarm payrolls, unemployment claims and the FOMC minutes of the June policy meeting. Japan will release Household Spending.

The spotlight will be on the Federal Reserve on Thursday, with the release of the FOMC minutes. The minutes could be a market-mover, as investors look for clues about upcoming rate hikes. The June hike marked the second in 2018, and whether the Fed will press the trigger three or four times this year remains a hot topic, as Fed policymakers appear split on the issue. The impressive performance of the U.S economy makes a strong case for four hikes, but the Fed is uneasy about escalating trade tensions as a result of President Trump slapping tariffs on major U.S trading partners.

The week started with the release of the well-respected Japanese Tankan indices. The Tankan Manufacturing Index dropped to 21 in the second quarter, down from 24 points in the first quarter. This reading was just shy of the estimate of 22 points. Tankan Non-Manufacturing Index edged up to 24, after being pegged at 23 for three straight quarters. This edged above the forecast of 23 points. Final Manufacturing PMI improved to 53.0, close to the estimate of 53.1 points. Trade tensions remain at high levels, and although Japan has not been on the receiving end of U.S tariffs, a global trade war could be devastating for the Japanese economy, which is heavily dependent on its export sector.

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