A look at the day ahead in European and global markets from Ankur Banerjee

The Japanese currency needed a fresh and sterner intervention warning from Tokyo on Wednesday to lift it off the one-year low touched after the central bank's policy tweak failed to excite yen hawks.

Masato Kanda, Japan's top currency diplomat, said authorities were on "standby" to respond to yen's recent "one-sided, sharp" falls, ramping up the rhetoric around yen-buying intervention - something the market has been on alert for in recent months.

As Europe wakes up, the yen is not far off the one-year low of 151.74 hit this week and the three-decade low of 151.94 touched last year, which triggered an intervention by Tokyo at the time.

The broad yen sell-off on Tuesday came a day after the BOJ watered down its 1% yield cap on the 10-year bond. While economists saw that as an unambiguous sign the cap's day were numbered, markets saw it as insufficient to close the wide interest rate gaps that have kept the currency under pressure.

So how has the Japanese bond market reacted? The 10-year yield rose to 0.970%, a level last seen in May 2013, prompting the BOJ to announce an emergency bond-purchase operation to stall its march. It was last at 0.965%.

How hard the BOJ defends the so-called 1% reference will be the key question traders ask in coming days.

Meanwhile, the central bank focus shifts to the United States, with the Fed widely expected to stand pat on rates although comments from Jerome Powell will again take the spotlight as investors parse every word to gauge where interest rates are headed.

Markets have priced in a 29% chance of a 25 basis point hike in December and a 35% chance of a 25 bps hike in January, the CME FedWatch tool showed, with traders bracing for the Fed and Powell to keep another hike on the table.

With little on Europe's economic calendar, investors are likely to keep the focus on the Fed and yen. Futures suggest European stock markets are set for a higher open.

Key developments that could influence markets on Wednesday:

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(Reporting by Ankur Banerjee. Editing by Sam Holmes)