The 14-pt drop in the February Chicago PMI to 45.8 is the biggest decline since October 2008 and the lowest level since Jul 2009. The sharp fall is attributed to inclement weather conditions (North East) and port-related delays (West Coast). The last time the index fell by more than 10 points was in October 2008, when the financial crisis unleashed brought a standstill to manufacturing activity and jobs losses escalated in the months to follow. Full charts & analysis.

The Fed is confident that low oil prices will only produce transient disinflation and they believe signals from the bond market about low inflation are wrong but one element of the inflation picture irks them – non-existent wage inflation.  Existing Premium trades remain in progress ahead of the last trading day of the month.

The economic models the Fed relies on shows that as jobs rise, wages should rise as well but that hasn't been happening and it's left many members of the Fed waiting 'patiently' for it to appear. The first sign may have come Thursday in the CPI report. The overall report was close to expectations but one number stood out: average weekly wages rose 1.2% in the month compared to the 0.3% consensus.

The data led to one of the largest US dollar rallies so far this year. The euro tumbled more than 1.5 cents to the lowest of the month as the dollar surged right across the board. 

The USD got additional fuel from the durable goods orders report. Core orders rose 0.6% compared to 0.4% expected to halt six months of flat industrial order growth.

Technically, cable made a move to watch. It stalled just ahead of the 2015 high and the 100-day moving average and then collapsed 150 pips to form an outside day. Cable had been one of the best trades of the month but it stumbled badly with only one trading day left in February.

Looking ahead, it's a very big data for economic data in Japan. The market continues to fret about what the BOJ will do next and these numbers may be a critical input. The first numbers hit at 2330 GMT including household spending and employment. At the same time, CPI is expected at 2.4% in the January national reading at 2.2% in the Feb Tokyo reading. But watch the core reading, which is forecast to rise 2.1%.

At 2350 GMT, the focus moves to industrial production and retail trade. To wrap it all up, BOJ leader Kuroda speaks at 0230 GMT and may offer his take on the data and what's next.

USD bulls found more support in today's US inflation and durables data than USD bears did, leading to a squaring off in Friday's release of the revised Q4 GDP figures. More charts & analysis on Canada CPI & UK GDP found here.

The turning point of the US financial crisis was a comment from Draghi that he was seeing 'green shoots' in the economy. Draghi made a similar comment Wednesday but didn't get the attention in the news or markets. Oil surged after inventory data while the US dollar lagged.  Our Premium subscribers have just received today's new GBP trade with 2 important charts, laying out the technical and fundamental arguments for the trade plan. Our 2 existing USDCAD shorts are currently netting a total of +280 pips, while the two AUDNZD shorts  are up a net +160 pips. Both GBPUSD longs are in the green, with a total of 260 pips. See Premium Insights.

Neither Yellen nor Draghi were able to jolt the market out of a slumber on Wednesday but a quiet trend of improvement in the European economy is emerging. French jobseekers fell by 19K compared to +8K expected and the ECB's Coene said GDP forecasts could be revised higher.

The larger statement may have come from Draghi, who said he sees the first signs of confidence returning to the economy. Certainly, the stock market has been seeing the same thing in the aftermath of the ECB QE announcement.

The euro also continues to stabilize. That's not particularly impressive after the recent swan dive but it's a start and with the speculative market still crowded into shorts, there is plenty of scope for a rebound.

On the topic of rebounds, crude initially plunged to a session low after an 8.4m barrel rise in US supply data but later jumped more than $2.50. The API data a day earlier had foreshadowed a large build and that led to a squeeze. The reversal traced out a bullish engulfing formation on the daily chart as well.

In the market, cable was impressive once again as it touched a six-week high at 1.5539. It's nearly wiped out YTD losses as the market increasingly believes the BOE will be the second central bank after the Fed to hike rates.

Looking ahead, two events in the coming hours are in focus. The first is Australian capex data for Q4 at 0030 GMT. It's expected to fall 1.6% after a 0.2% rise in Q3. Companies continue to slash spending in Australia so any good news would largely be shrugged off while a poor reading would solidify worries.

More interesting might be at 0200 GMT when New Zealand releases data on currency sales for January. Wheeler has intervened in the past 6 months and continues to jawbone. It would be a surprise if the RBNZ was still selling.