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Forex: USD/JPY sidelined around 93.30

After being rejected from a high of 94.45 last Monday, USD/JPY pulled back weighed by the unclear G7 statement and entered in a consolidation phase that has extended over the last days.

Nevertheless, USD/JPY saw some intraday weakness and fell to a low of 93.08 before finding support and bouncing. At time of writing, the cross is trading around 93.35, where it is virtually unchanged since opening.

The yen has remained fairly steady despite Japan reported a 0.1% contraction in Q4 GDP during the Asian session and the BOJ concluded its 2-day meeting, leaving policy unchanged.

Forex Flash: HUF performance may become hurdle for the MPC – TD Securities

TD Securities analysts say that the HUF performance could become a serious hurdle for the MPC to overcome if they decide to continue easing, as inflation falls on the heels of favorable base effects and close to non-existent domestic private demand. "The double GDP & CPI data release today showed that the slowdown in economic activity continued in Q4 and was deeper than expected, revealing a sharp drop in domestic demand as the main driver of disinflation in the recent months”, wrote analyst Cristian Maggio, pointing to the GDP at -2.7% Y/Y in Q4, down from -1.5% in Q3, and below consensus of –1.9%. “Weak Q4 data implied that the Hungarian economy contracted by 1.7% in 2012, 0.2ppt below our estimate of -1.5%”, Maggio added, saying that CPI continued to decelerate against this backdrop, reaching 3.7% Y/Y in January (consensus of 3.9%) from 5.0% in December, "with the sharp drop driven by the phasing out of the VAT increase from 25% to 27% in Jan 2012, and utility bill cuts this year". "We think that the easing cycle will continue, but not at the pace of one cut per month", the analyst concluded.
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Forex Flash: USD/JPY could target 93.00-95.00 by H1 2013 – Rabobank

The cross is now bouncing off lows in the proximities of 93.10 to the current region around 93.30 in a context dominated by the increasing risk aversion....
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