Australian CPI for Q4 came out at +0.8% and the Trimmed Mean CPI, which attempts to eliminate distortions, came out at +0.9% as both gauges handily beat market expectations of +0.5% and +0.6% respectively. AUD/USD, which had been trading with a heavy tone around 0.8790 in anticipation of weaker numbers, surged higher triggering reported stops above 0.8850 as weak shorts were squeezed out. This release suggests that inflation is heating up even while the labor market continues to struggle and the Aussie's price action, especially if it were to persist, would pose a bit of a dilemma for the RBA who might have been hoping that a weaker currency might obviate the need for them to cut rates rates further. As it stands now, that decision has just become a bit more complicated.
The BOJ just announced the results of their two day monetary policy meeting and, as was widely expected, left their monetary base target unchanged while keeping the yearly net JGB purchases at 50 trillion YEN. USD/JPY had a muted response as it dithers around the 104.20 level with the market's focus turning to Governor Kuroda's press conference which is slated to begin a bit later on.