Yen rebounds across the board in early US session after disappointment from US data. Meanwhile, Euro remains generally steady after ECB rate decision and press conference. Retail sales unexpectedly fell -0.3% in December. Ex-auto sales also dropped -0.2%. Initial jobless claims rose slightly to 444k even though the 4-week average dropped to 18 months low of 440.38k. Continuing claims dropped by 211k to 4.6m. Import price was flat in December.

ECB left rates unchanged at 1.00% as widely expected. Trichet said in the press conference that rates are still appropriate. Trichet expects the economy to recovery at a moderate pace this year and inflation pressure will remain subdued. Though the path of recovery will likely be uneven. When talking about Greece's exit of Eurozone, Trichet said he wouldn't comment on an absurd hypothesis. Instead, Trichet said that ECB would carefully examine Greece's steps to slash the deficit over three years to below 3%. Data released from Eurozone were solid. Eurozone industrial production rose 1.0% mom, dropped -7.1% yoy in November versus consensus of 0.6% mom, -8.4% yoy. German CP was revised up to 0.8% mom, 0.9% yoy in December.

BoE Barker's comments was less optimistic than Sentance's. Bark said that the first half of 2010 may be patchy in UK but she's a bit more optimistic after that. She expects to see positive growth in the fourth quarter.

Aussie was lifted by stronger than expected job data released overnight. The Australia economy gained 35.2k jobs in December, much better than expectation of 10k. Unemployment rate also fell unexpectedly from downwardly revised 5.6% to 5.5% in December. Japan machine orders dropped -11.3% mom, -20.5% yoy in November. Domestic CGPI dropped -3.9% yoy in December.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 90.99; (P) 91.28; (R1) 91.65; More.

USD/JPY's sharp fall in early US session suggests that recovery from 90.74 might have completed at 92.03 already after hitting 4 hours 55 EMA. Intraday bias is cautiously on the downside and break of 90.74 support will indicate that whole fall from 93.74 has resumed for 87.36 support next. Break there will also confirm that whole rise from 84.81 has completed. In such case, medium term down trend is possibly resuming for new low below 84.81. On the upside, above 92.03 will delay the bearish case and bring more consolidations first before another fall.

In the bigger picture, at this point, USD/JPY is still trading below medium term trend line resistance at 95.06 and 55 weeks EMA at 94.21. Hence, there is no clear indication of reversal yet. A break of 87.36 support will indicate that rebound form 84.81 has completed and the whole fall form 124.13 is possibly resuming for 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.