The Japanese yen advanced against its major rivals in the European session on Wednesday, as investors turned cautious ahead of the outcome of policy meeting by the U.S. Federal Reserve due later in the day.

The central bank is not expected to take any immediate action, but investors will be parsing the statement to see whether the policy makers consider starting discussions about scaling back $120 billion bond purchase program.

The Fed will also publish economic and interest rate projections, and expectations are that the so-called dot plot could point to a rate hike in 2023.

Official data showed that China's industrial production and retail sales grew less than expected in May.

Industrial production grew 8.8 percent on a yearly basis in May, weaker than the economists' forecast of 9 percent.

Retail sales expanded 12.4 percent annually, which was slower than the expected increase of 13.6 percent.

Data from the Ministry of Finance showed that Japan posted a merchandise trade deficit of 187.1 billion yen in May.

That missed expectations for a shortfall of 91.2 billion following the downwardly revised 253.1 billion yen surplus in April.

Data from the Cabinet Office showed that Japan core machine orders rose a seasonally adjusted 0.6 percent on month in April - coming in at 802.9 billion yen.

That missed expectations for an increase of 2.7 percent and was down from 3.7 percent in March.

The yen rose to 2-day highs of 109.90 versus the greenback, 133.23 versus the euro and 90.19 versus the loonie, after falling to 110.14, 133.59 and 90.43, respectively in early deals. The currency is likely to find resistance around 108.00 versus the greenback, 130.00 versus the euro and 88.00 versus the loonie.

The yen recovered to 155.00 against the pound and 78.44 against the kiwi, from its prior lows of 155.38 and 78.68, respectively. On the upside, 150.00 and 76.00 are likely seen as its next resistance levels against the pound and the kiwi, respectively.

In contrast, the yen weakened to 84.76 against the aussie from Tuesday's close of 84.56. If the yen falls further, it may challenge support around the 86.00 level.

Looking ahead, Canada CPI, U.S. housing starts and building permits and import and export prices, all for May, are due out in the New York session.

At 2:00 pm ET, the Fed announces its decision on interest rate. Economists widely expect the federal funds rate to be kept at 0-0.25 percent.

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