Dollar continues to consolidate as global stocks recover. Sterling was lifted by better than construction PMI while Euro is lifted by stronger than expected PPI reading. Nevertheless, the retreat in dollar is so far mild. More apparent strength is seen in Canadian dollar which is supported by crude oil's rebound to above 75 level. Aussie was sold off earlier today as RBA unexpected left rates unchanged and remains soft in early US session.

As a surprise to the market, the RBA announced to keep the overnight cash rate unchanged at 3.75%, following 3 consecutive raises last year, as policymakers would like to gauge the impact of previous hikes and stimulus withdrawal. (more in RBA Warrants Doing Less as China is Doing More). Aussie was sold off sharply across the board after the announcement. AUD/CAD is indeed the biggest loser today as the CAD is lifted by rebound in crude oil. The cross's trend seems to have changed since last Q4 and could have already topped out at 0.9912. Today's sharp fall argue that the near term down trend is resuming for 0.9197 and below. We'd expect Aussie to underperform the loonie in near term.

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On the data front, Japan monetary base rose 4.9% yoy in January. Australia NAB business confidence dropped to 8 in December. Swiss SECO consumer confidence improved more than expected to -7 in January. German retail sales rose less than expected by 0.8% mom in December. GBP PMI construction improved more than expected to 48.6 in January even though it's still staying in contraction region below 50. Eurozone PMI rose 0.1% mom in December, dropped -2.9% yoy.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 90.01; (P) 90.48; (R1) 91.07; More.

Outlook in USD/JPY remains unchanged. While further recovery cannot be ruled out, fall from 93.74 is still in favor to continue as long as 91.86 resistance holds. Below 89.97 will flip intraday bias back to the downside. Break of 89.13 will confirm fall resumption to 87.36 support next. As discussed before, break of 87.36 will also confirm the bearish case that whole rise from 84.10 has completed with three waves up to 93.74 already and that medium term down trend is resuming for another low below 84.81. However break of 91.86 will invalidate the bearish view and suggest that rise from 84.81 is still in progress for another high above 93.74.

In the bigger picture, USD/JPY is still trading below medium term trend line resistance at 94.18 and 55 weeks EMA at 93.79 Whole down trend from 124.13 is likely still in progress and a break of 84.81 will target 1995 low of 79.75. However, note bullish convergence condition is seen in weekly MACD. Sustained trading above the medium trend line resistance will be the first signal of medium term reversal and in such case, focus will turn to 101.43 resistance for confirmation.

USD/JPY