Janet Yellen shocked the currency market today by remaining resolutely hawkish in her view, suggesting that 3 rate hikes this year will be a distinct possibility. This, despite a clear deceleration of momentum in recent economic data. Both the currency markets and the bond markets took her sanguine views with a dose of skepticism as USD/JPY rallied but failed to take out the 114.50 level much less the much more important 115.00 barrier.

Tomorrow, however, the bulls may get their chance. US Retail Sales data is due and it will shed light on the state of the consumer. If the Retail Sales pick up pace as they are expected to rising by 0.4% from 0.2% the month prior, the case for a March rate hike will strengthen. Yet if the number is tepid – and worse even negative, USDJPY could quickly trade back towards 113.00 irrespective of what Ms. Yellen will say.