JPY failed to get the ‘risk on’ message with JPY dipping into the USD113s. Markets, while fearful of ‘intervention’, clearly expect JPY strength.

USD fell to the lowest against JPY since November 2014 as investors rushed to safe-haven Japanese currency, withdrawing from earlier optimism that the Fed would continue to raise interest rates.

The Yen has dropped 6.71 percent month-to-date. Markets await the US Retail Sales data due tomorrow. Japan’s producers prices plunged 3.1% YOY in Jan (Dec: revised to - 3.5% YOY), more than the expected 2.8% YOY decline.

PPI dropped for ten straight months, dragged by low commodity prices. On the other hand, housing loans climbed 2.2% YOY in 4Q (3Q: 2.4% YOY) which was the slowest pace since Dec 2011.

The prints are largely in line with expectation that the Japanese economy may slip into contraction again in 4Q.

Trade Idea
With the decisive break of the weekly neck line at 115/114 I will be looking to fade any retest of this area from below, targeting a test of the 110 ahead of 105 as the ultimate downside objective for this move.

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