G10/Dollar Trends Steady, US PCE In Focus Later

G10 FX trends have been relatively muted in Friday trade to date. The BBDXY sits marginally lower versus end Thursday levels in NY, last near 1237.2.

• Cross asset sentiment has been softer in the equity space, led by tech plays (Nasdaq futures off around 0.7% on late earnings disappointment, led by Intel). This hasn't impacted sentiment a great deal in the FX space though.
• Likewise, a modestly softer US yield backdrop (nearly -2bps lower for some benchmarks). US Treasury Secretary Yellen said on Thursday (US time) that surprisingly strong economic growth in the fourth quarter was a "good thing" that signals continued healthy consumer spending without increases in inflationary pressures.
• USD/JPY has seen a low of 147.48, against a high of 147.85 (we currently track at 147.70/75). the Tokyo Jan CPI print was much weaker than expected. Lower entertainment prices (weighed by the Jan earthquake) a factor.
• Still, the data suggests no rush for the BoJ to move away from easy policy settings. The BoJ Dec minutes also came out. In short, BoJ board members had a big debate on the timing of liftoff and the pace of subsequent rate hikes. That said, not everyone was convinced of the need to move at all quickly, with some members saying that it wasn’t too late to make a decision post-spring wages and others stating that it was likely that the BoJ was likely to keep substantial easing for the time being.
• AUD/USD has drifted a little higher but remains sub 0.6600, with local markets closed today for a public holiday. NZD/USD has traded tight ranges, the pair last in the 0.6105/10 region.
• Looking ahead, the main focus will be in the US session, with the PCE Core Deflator and personal spending data on tap.