Dollar’s recover lost steam quickly today and is set to end the week mixed. US GDP grew 1.9% annualized in Q4, below expectation of 2.2%. GDP price index rose 2.1%, met consensus. Durable goods orders dropped -0.4% in December, much lower than expectation of 2.6%. Ex-transport orders rose 0.5%, met expectations. UK prime minister Theresa May will meet US president Donald Trump in Washington today and that could be a focus. US futures point to a flat open and markets could turn into profit taking mode after record rerun in stocks.
Eurozone M3 rose 5.0% yoy in December versus expectation of 4.9% yoy. Bank loans to companies rose 2.3%, fastest since mid-2009. Household lending rose 2.0%, fastest since mid-2011. The set of data showed that ECB’s cheap money is making its way through the economy. And such development could lift growth and inflation later down the road. Also from Eurozone, German import price index rose 1.9% mom, 3.5% yoy in December versus expectation of 1.3% mom, 2.7% yoy.
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. Elsewhere, Australia PPI rose 0.7% qoq, 0.7% yoy in Q4. Import price rose 0.2% qoq in Q4.
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 113.42; (P) 114.13; (R1) 115.23; More…
USD/JPY is still bounded in range of 112.51/115.61 and intraday bias remains neutral. 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
| GMT | Ccy | Events | Actual | Consensus | Previous | Revised |
|---|---|---|---|---|---|---|
| 23:30 | JPY | National CPI Core Y/Y Dec | -0.20% | -0.30% | -0.40% | |
| 23:30 | JPY | Tokyo CPI Core Y/Y Jan | -0.30% | -0.40% | -0.60% | |
| 00:30 | AUD | PPI Q/Q Q4 | 0.50% | 0.20% | 0.30% | |
| 00:30 | AUD | PPI Y/Y Q4 | 0.70% | 0.50% | ||
| 00:30 | AUD | Import Price Index Q/Q Q4 | 0.20% | 0.40% | -1.00% | |
| 07:00 | EUR | German Import Price Index M/M Dec | 1.90% | 1.30% | 0.70% | |
| 07:00 | EUR | German Import Price Index Y/Y Dec | 3.50% | 2.70% | 0.30% | |
| 09:00 | EUR | Eurozone M3 Y/Y Dec | 5.00% | 4.90% | 4.80% | |
| 13:30 | USD | GDP (Annualized) Q4 A | 1.90% | 2.20% | 3.50% | |
| 13:30 | USD | GDP Price Index Q4 A | 2.10% | 2.10% | 1.40% | |
| 13:30 | USD | Durable Goods Orders Dec P | -0.40% | 2.60% | -4.50% | |
| 13:30 | USD | Durables Ex Transportation Dec P | 0.50% | 0.50% | 0.60% | |
| 15:00 | USD | U. of Michigan Confidence Jan F | 98.1 | 98.1 |
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