Dollar stays generally weak in early US session and receives no support from another round of solid economic data. Initial jobless claims rose 5k to 239k in the week ended February 11. But that was better than expectation of 245k. Continuing claims dropped 3k to 2.08m in the week ended February 4. Housing starts dropped -2.6% mom to 1.25m in January, above expectation of 1.23m. Building permits rose 4.6% mom to 1.29m, above expectation of 1.23m. Meanwhile, Philly Fed survey jumped sharply to 43.3 in February. The greenback weakens against all major currencies except Aussie and Kiwi today. Meanwhile Dollar trading down versus against all others except Euro and Yen. Recent hawkish comments from Fed provide little support. It seems that Dollar traders are more worried about the uncertainties over fiscal policies.

Fed Vice Fischer joined hawkish chorus

Fed vice chairman Stanley Fischer said in an interview that the development in the economy is "consistent" with Fed’s expectation. And it’s "moving closer to the 2% inflation" and "labor market would continue to strengthen. And, wage growth has "started happening". Fischer reiterated that "we expect interest rates to be gradual, and if they reach the level of previous years it will be a matter of years."

Yesterday, New York Fed president William Dudley said "we expect to gradually remove further monetary policy accommodation and snug up interest rates a little bit further in the months ahead". Boston Fed president Eric Rosengren sounded hawkish and said that "it will likely be appropriate to raise short-term interest rates at least as quickly as suggested by the Fed’s current … median forecast, and possibly even a bit more rapidly."

ECB accounts: outlook largely unaltered

The accounts of January ECB monetary policy meeting showed that policymakers believed "the fundamental picture remained largely unaltered." And, the central bank should "remain patient and maintain a ‘steady hand’" in the face of "a high level of uncertainty." The accounts pointed to risks of "political environment at the global level and within the euro area." And, so far the progress was "insufficient to bring a "durable and self-sustaining" rise in inflation.

BoJ Kuroda: Low profitability in financial institution could price new crisis

BoJ governor Haruhiko Kuroda warned that "a new challenge has emerged in the form of low profitability at financial institutions," due to the plunge in interest rates. And, "a different kind of financial crisis could happen in the future." And, "for the financial system to ensure future stability, it is becoming more and more important in the long term to think about possible responses to low profitability at financial institutions."

Aussie job data mixed

Employment in Australia grew 13.5k in January, above expectation of 10.0k. However, that was solely driven by part-time jobs as full-time jobs contracted by -44.8k. Unemployment rate, on the other hand, dropped slightly to 5.7%. Consumer inflation expectations slowed to 4.1% in February.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 113.69; (P) 114.32; (R1) 114.80; More…

Intraday bias in USD/JPY remains neutral for the moment and some more consolidations could be seen below 114.94 temporary top. With 113.24 minor support intact, further rise is still in favor. We’re holding on to the view that correction from 118.65 has completed at 111.58. Break of 115.36 will confirm this bullish case and bring retest of 118.65 high. Meanwhile, below 113.24 minor support will dampen this bullish view and could extend the correction from 118.65. In that case, downside should be contained by 38.2% retracement of 98.97 to 118.65 at 111.13 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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