USD/JPY Unfazed by Fear Trade, China CPI Next

Fear gripped Wall Street on Thursday but it didn't spill over to FX. The yen was the top performer while the loonie lagged. The BOJ minutes and Chinese CPI are due later. 1 of 2 EURUSD Premium longs from last Thursday's post-ECB conference entry hit its final 1.3890 target from 1.3710 entry. The other final target loons close. Both USDCHF and 1 USDCAD remain in progress as do USDJPY, AUDNZD and AUDCAD. All these trades are in the existing Premium Insights.

The USD/JPY performance on Thursday was impressive. The S&P 500 was battered, falling 39 points and Treasury yields continued to wilt, yet the pair fell only 50 pips on the day to 101.45.

There is a zone of major support at the March lows of 102.20 extending down to the 200-day moving average at 101.81 but there was no appetite to challenge it.

Even the commodity bloc was hardly moved by the pain elsewhere. USD/CAD was the only pair that showed any kind of reaction as stocks opened flat and then slowly bled lower. Still, the pair only climbed to 1.0933 from 1.0890 and it came after three weeks of selling.

The selloff wasn't based on new US news. The lone report was initial jobless claims and it was the best reading since 2007 at 300K compared to 320K expected. The culprits of weather, the lack of a snap-back in Spring data and overvalued tech stocks were cited but that's hardly new information.

Instead, we look to China. Trade balances numbers were worrisome – although not as scary as the initial headlines suggested because of over-invoicing a year ago.

What scares the market is that Chinese officials are looking like they want to shake out their own economy. Premier Li ruled out any stimulus in a speech and said somewhat lower growth is tolerable. That's the equivalent of Yellen saying the Fed will no longer come to the rescue of the US economy.

The Australian dollar is at the largest risk but with the RBA shifting toward a hawkish bias and strong jobs numbers, it's not the right time to fight the momentum.

The unwillingness of Chinese officials to launch any kind of stimulus makes today's China CPI report at 0230 GMT less important. The consensus is a 2.4% y/y rise. The BOJ minutes from March 10-11 are also unlikely to jolt markets in the 0050 GMT release.