USD/JPY Clears 110 to narrow gap with.........>

FOREX: USD/JPY Clears 110 to narrow gap with multi-month highs

- It was a generally quiet session in G10, with most major pairs headed into the

close near flat, reflected in lower implied vols across DM currencies. After a

few sour sessions though, GBP inched higher, gaining against most others in G10.

No headlines or data crossed to support the move suggesting the market may be

closing successful shorts ahead of the next slew of UK data, starting with

retail sales data Friday and PMIs next week. The modest improvement in the GBP

coincided with the a slight pullback in the market pricing for a BoE rate cut as

soon as January, which fell around 5 percentage points to circa 60%.

- Elsewhere, US economic data generally fared well, with retail sales, Philly

Fed outlook surveys and weekly jobless claims all stronger than forecast. This

underlined a minor bidtone under USDJPY, which now appears to have cleared the

Y110 handle which bulls had previously had difficulty in holding above.

- Chinese GDP data for Q4, UK retail sales, US housing starts/building permits,

industrial production and prelim Uni of Michigan numbers are the data highlights

Friday. Fed's Harker and Quarles are both due to speak.