Yen falls broadly today on news that BoJ boosted JGB purchases. The move is seen as an act under the so called yield curve control to cap surge in yields, which touched 11 month highs earlier this week. The central bank said today that it would buy JPY 450b of JGBs with maturity of more than five to 10 years. That’s nearly 10% above the prior size of JPY 410b. Released from Japan, national CPI core improved to -0.2% yoy in December, up from -0.4% yoy and above expectation of -0.3% yoy. Tokyo CPI core rose to -0.3% yoy in January, up from -0.6% yoy, and above expectation of -0.4% yoy. The set of inflation data showed mild improvement to inflation outlook. But it’s still far from hitting BoJ’s 2% target. Technically, yen is staying in consolidation against Dollar, Euro and Sterling for the moment in spite of the selloff in the past two days.

In US, equities ended mixed after hitting new intraday record highs. DJIA gained 32.4 pts, or 0.16% to close at 20100.91, a record high. But S&P 500 closed down -1.69 pts, or -0.07%, at 2296.68. NASDAQ lost -1.16 pts, or -0.02%, to close at 5655.18. President Donald Trump’s spokesman said that Trump would push to impose 20% tax of imports from Mexico to pay for a border wall along the southern border of the US. Mexican president Enrique Peña Nieto responded by cancelling the meeting with Trump. Form Fed chair Ben Bernanke said that there is no need to "rush" the process of reducing the size of its massive balance sheet. He emphasized that "the case for deferring action until short-term rates are meaningfully higher remains at least as strong as it was when the FOMC’s strategy was first devised."

Talking about exiting QE, Bundesbank head Jens Weidmann said that "economic outlook at the beginning of the year is quite positive and the inflation rate is gradually approaching to the ECB’s definition of price stability." And, "if this price development is sustainable, the prerequisite for the withdrawal from the loose monetary policy is created."ECB executive board member Yves Mersch said that "once inflation is sustainably back to our objective, monetary policy will normalize." Dutch central bank head Klaas Knot noted that "the tail risk of a deflationary spiral is no longer imminent, removing one important rationale for large-scale asset purchases." Meanwhile, Forward Eonia bank-to-bank rates imply that there is 50% chance of ECB rate hike by January 2018.

Elsewhere, Australia PPI rose 0.7% qoq, 0.7% yoy in Q4. Import price rose 0.2% qoq in Q4. German import price, Eurozone M3 will be released in European session. But main focus will be on US Q4 GDP and durable goods orders to be released in US session.

USD/JPY Daily Outlook

Daily Pivots: (S1) 113.42; (P) 114.13; (R1) 115.23; More…

USD/JPY’s recovery from 112.51 continues but stays below 115.61 resistance. Intraday bias remains neutral at this point. No change in the view that choppy fall from 118.65 is a corrective move. Break of 115.61 will indicate that it’s completed and will turn bias to the upside for retesting 118.65 resistance. Break will resume whole rise from 98.97 and target 125.85 key resistance. Below 112.51 will extend the decline but downside should be contained by 38.2% retracement of 98.97 to 118.65 at 111.13 to complete the correction and bring rebound.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Rejection from 125.85 and below will extend the consolidation with another falling leg before up trend resumption.

Economic Indicators Update

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