USD/JPY consolidates above bear cycle lows in firm US dollar environment

• USD/JPY bears in town but the price consolidates in 132 area.
• Bulls eye a correction from supporting territory.

USD/JPY is flat on the day near 132.40 and consolidating the drop that occurred into the 130.60s in an extension of the late December drive to the downside. The US Dollar firmed on Thursday but as measured by the DXY index vs. a basket of currencies, it has so far failed to meaningfully recoup the 3.8% slump that followed Tuesday's Bank of Japan (BoJ) news. Nevertheless, US data has supported the hawkish sentiment surrounding the Federal Reserve (Fed).

US data keeps Fed sentiment alive

The Department of Labor said Weekly Jobless Claims in the US rose less than expected. Seasonally adjusted numbers of initial Unemployment Claims rose by 2,000 to 216,000 in the week ended Dec. 17. The consensus on Econoday was for a 225,000 print. The previous week's level was revised up by 3,000 to 214,000. The four-week moving average tallied 221,750, sliding by 6,250 from the previous week's revised average of 228,000. Unadjusted claims declined by 4,064 on a weekly basis to 247,867. Consequently, the DXY rallied into the 104.50s from a low of 103.75 but stays far below the highs for the month near 107.20 while US Treasury yields also edge up following the data on Thursday. 

Meanwhile, Japan's core Consumer Prices climbed 3.7% in November from a year earlier, government data showed on Friday. The increase in the core consumer price index, which excludes volatile fresh food but includes oil costs, matched a median market forecast for a 3.7% increase. Shortly afterwards, the October meeting minutes were released by the Bank of Japan:

• Bank of Japan Oct Minutes: Members agreed must maintain current easy policy to hit price target