• USD/JPY +0.5%
• USD/CAD +0.5%
• GBP/JPY +0.6%

USD/JPY

Dollar Bulls Ride The Wave: Dollar data propelled the bulls during the session, but not without first going for a wild ride.  Bolstering the underlying single currency pair, industrial production and manufacturing activity figures both were released positive, rising above consensus.  The upbeat figures lend to growth and expansion potential in the overall economy and underpin current speculation that continued tightening by policy officials will be needed in remaining ahead of inflationary pressures.  Although dipping slightly according to the most recent consumer price report, Federal Reserve officials remain vigilant as consumer price increases may very well spike on higher energy costs in the near term.  With Bernankeââ,¬â"¢s statements today simply an echo of what had been stated late last year, dollar traders will be looking ahead to tomorrowââ,¬â"¢s Philadelphia Fed index.  A gauge of manufacturing in the region, further optimism would be produced should the survey print high following recently lower lows.  Additionally, look for housing starts and initial jobless claims to once again play a role in the sessionââ,¬â"¢s flux.

Rumorville: Bids remain at 116.75 for a touch back on carry trade reinitiation, under current spot.  However, given the dayââ,¬â"¢s momentum, offers above may reign as we head into the Asian session.  Selling interest looks heavy above at 118.30 and 118.50.

USD/CAD

Traders Look To Crude In Lowering CAD: Boosted on U.S. data during the session, the USDCAD currency pair was lifted by lower crude oil prices on the New York Mercantile Exchange.  Differing from the recent positive retracement in underlying base metal prices, crude oil contracts continued to trade lower on a better than expected Energy Department report.  According to todayââ,¬â"¢s weekly release, oil inventories in the U.S. rose over 4 times the consensus figure, lending to speculation that the previous supply concern was unwarranted.  With the Canadian economy known for its petrol exports, traders additionally pared back positions as weaker prices look to adversely affect the regionââ,¬â"¢s producers as well as expectations of a near term interest rate hike.  Should tomorrowââ,¬â"¢s international securities transactions report and manufacturing shipments fall short of the market, investors should be wary of further carry trade initiations.

Rumorville: Bids look to prop up near term price action as buy entries are centered around 1.1510/15.  However, given todayââ,¬â"¢s momentum, paring looks completely immient prior to further directional bias.  As a result, offers are abound at 1.1610/15 with corresponding stops above at 1.1620.

GBP/JPY

BOE Restores Marketââ,¬â"¢s Confidence in Growth: In Bank of Englandââ,¬â"¢s quarterly report released in the London session, traders were quick to react to policy makerââ,¬â"¢s  expectations for growth to once again outpace its long-run average in the coming two to three years.  More important  to market participants were statements to the effect that inflation is likely to stay near 2 percent annual growth  while conditions in the volatile energy market remain unclear.  To the market, this means inflation that is already  cutting into corporate profit margins, will likely be met with another rate hike to cool keep prices inline.   However, some opponents to this view are still pointing to high levels of public debt and a jobless rate that rose  to 5.1 percent, according to the most recent number, as reasons why consumer spending will further detract from  growth and inflation in the coming future.

Rumorville: A horde of buy orders are rumored to lie around Mondayââ,¬â"¢s pivot high 205.70 level, with expectations of a run beyond  this level to cap out at February 11ââ,¬â"¢s 207.30-high.  However, the risk/reward of this run pales in comparison to a  bear run from current levels to 202.90 lows were fresh buy orders will reenter from the selloff.

Richard Lee is a Currency Strategist at FXCM.