Unsettled Markets Prompt JPY Bounce

Contrasting the optimism earlier in the week, stocks are lower early Friday, with core European markets off around 2% apiece as US stock futures edge through yesterday's low. The risk-off moves have helped underpin a recovery in haven FX, particularly the JPY, which had traded offered ever since the Monday open.

USD/JPY eyes first support at the Thursday lows of 106.57, pulling away from the recovery highs posted in Asia-Pac trade. Chinese industrial production and retail sales numbers generally disappointed, leaving European markets facing a muted open. This has extended into early US hours, with the ongoing failure of US lawmakers to strike a fiscal deal and the imposition of quarantine measures on travelers into the UK from France.

Other markets are in reverse, with the week's best performer - the NOK - the weakest currency so far Friday. The greenback is favoured on current haven flows, with EUR not too far behind.

US retail sales & industrial production data are the focus in US hours. Retail sales are seen rising 2.1% on the month, a marked moderation from the 7.5% posted last month. Industrial production data is viewed similarly, with growth seen slowing to 3.0% from 5.4%. Fed's Kaplan is also due to speak.