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USD/JPY posted a leg lower and pierced Thursday's low in early Tokyo trade, as U.S. e-mini futures trade in the red, signalling that Wall Street woes may not be over. The retreat in U.S. stock indices is spilling over into Asia, with both Antipodean equity benchmarks losing ground.

  • Japanese CPI figures were just a tad worse than expected. The key measure of underlying inflation stayed at +0.5% Y/Y in December, missing the consensus forecast of +0.6%. The report pours some more cold water on recent speculation that the BoJ might start discussing policy normalisation.
  • The data comes after the BoJ earlier this week said that risk to the inflation outlook are roughly balanced, the first time they didn't see risks skewed to the downside since 2014. On that note, PM Kishida told lawmakers Thursday that the BoJ should continue to work towards achieving its official inflation target of +2.0% Y/Y.
  • The minutes from the BoJ's December meeting are due shortly. Looking further afield, Japan's flash Jibun Bank PMIs will be out on Monday, with Tokyo CPI coming up Friday. Elsewhere, the summary of opinions from the BoJ's most recent monetary policy meeting will hit the wires on Tuesday.
  • USD/JPY last sits at Y114.03, 8 pips lower on the day & off the earlier session low of Y113.86. Bears look for a further sell-off towards Jan 14 low/76.4% retracement of the Nov 30 - Jan 4 rally at Y113.49/43. Conversely, a jump above Jan 18 high of Y115.06 would expose Jan 11 high of Y115.68.
MNI London Bureau | +44 203-865-3806 | krzysztof.kruk@marketnews.com
MNI London Bureau | +44 203-865-3806 | krzysztof.kruk@marketnews.com

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