Forex - Japanese yen flat ahead of Q3 Tankan survey, dollar steady

Investing.com - The Japanese yen was flat Wednesday ahead of the quarterly Tankan survey with markets focused on near-term scope for further dollar strength.

USD/JPY traded at 109.65, flat, while AUD/USD held at 0.8746, down 0.02%. EUR/USD traded at 1.2627, down 0.02%.

China starts a week-long holiday to mark National Day and markets will reopen day next Wednesday.

That however doesn't stop the release of the CFLP PMI due at 0900 local time (0100 GMT). Economists are expecting 51.0 versus August's 51.1.

Hong Kong markets are closed Wednesday and Thursday.

The Bank of Japan releases its third quarter Tankan survey at 0850 Tokyo (2350 GMT). The September Tankan is expected to show that capital investment plans by major companies will rise 7.2% on year in fiscal 2014, slightly lower than the 7.4% gain projected in the June survey.

In Australia, there's the AI Group's September manufacturing index due at 0930 Sydney (2330 GMT) followed by the 1130 (0130 GMT) release of August retail sales, expected up 0.4%.

Overnight, the dollar traded higher against most major currencies as investors took up fresh positions assuming the Federal Reserve will close its bond-buying program in October and hike rates in 2015.

Expectations for U.S. monetary policy to grow less accommodative at a time when others may move to loosen bolstered the greenback on the last day of the third quarter.

The Federal Reserve will hold its next monetary policy meeting at the end of October, and markets expect the U.S. central bank to end its monthly bond-buying program then, which should open the door to tighter policy down the road.

Expectations for Europe and Japan to keep policy loose also boosted the greenback.

Eurostat, the statistics arm of the European Union, reported earlier that the euro area's annual inflation rate fell to a five-year low of 0.3% in September from 0.4% in August.

Core inflation, which strips out food, energy, alcohol and tobacco costs, came in at 0.7%, down from 0.9% in August.

Slumping consumer prices fueled market expectations for the European Central Bank to implement fresh stimulus measures to stave off the threat of deflation in the region after the bank unexpectedly cut rates to record lows last month.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.01% at 86.03.

On Wednesday, the U.S. is to release the ADP report on private sector job creation, which leads the government’s non-farm payrolls report by two days. Later in the session, the Institute of Supply Management is to release a report on manufacturing activity.