Yen Catches Bid Amid Flight To Safety

The yen rallied Thursday on safe haven bid inspired by heightened geopolitical tension surrounding the Russia-Ukraine standoff. Reports of intensifying shelling in the separatist Luhansk region and subsequent blame game between Kyiv and pro-Russian rebels reignited broader risk aversion, with NATO countries still expressing doubt re: Russian claims of a partial military pullback. Spot USD/JPY retreated to its worst levels in two weeks.

• USD/JPY last changes hands at Y114.82, down 12 pips on the day, as a defensive feel persists. A fall through the 50-EMA at Y114.73 would shift focus to Feb 2 low of Y114.16. Conversely, a rebound above Feb 10/Jan 4 highs of Y116.34/35 would signal the resumption of a broader uptrend.
• PM Kishida noted that the gov't was debating measures to east the impact of high oil prices as the outlook remains unclear. Elsewhere, FinMin Suzuki pointed to the need for continued fiscal support, while reiterating the gov't's familiar views on inflation.
• Japan's core CPI inflation slowed to +0.2% Y/Y in January from +0.5% in December, printing below the median estimate of +0.3%.
• Next week, focus turns to flash Jibun Bank PMIs (Monday) & Tokyo CPI (Friday).