Yen Strengthens On BoJ Speech, A$ Higher, US PCE In Focus Later

Yen strength has been the main feature of G10 FX markets today. The BBDXY was last down a little over 0.1%, tracking close to 1242. AUD/USD is also higher, as is NZD, but the Kiwi has lagged somewhat.

• USD/JPY was drifting lower before BoJ Board member Takata spoke, but broke down through 150.00 on hawkish comments from the central banker. Most notably was reference to the price target finally coming into sight. References to current spring wage negotiations was also bullish.
• USD/JPY got to lows of 149.70, not too far from the 20-day EMA (near 149.63), but we now sit slightly higher at 149.85.
• AUD/USD has risen around 0.35%, last close to 0.6520. Firmer China equities have helped, although trends are mixed elsewhere in the region. Iron ore prices have also stabilized, last near $118/ton, up around 1.6%. Data was mixed with retail sales sub expectations, but capex slightly stronger. We didn't see an AUD reaction though.
• NZD/USD didn't react to the earlier data, and has remained in very tight ranges, although making new daily highs of 0.6104, if the pair is able to hold back above 0.6100 level, a further move higher wouldn't be unexpected after Wednesday's 1.20% move lower.
• AUD/NZD is edging higher as trading progresses today, nearing highs made during the US session on Wednesday (1.06857) to trade last at 1.0675/80.
• Looking ahead, the January PCE deflator will be the last reading of the Fed's preferred inflation gauge before the March FOMC meeting. Before this, regional inflation data from the Eurozone, including Germany, Spain and France is out.