The US Dollar declined on Friday morning, as additional disappointing data for the start of the year put a damper on the outlook for the US economy.
US Manufacturing Production declined 0.8% in January, which was the worst in four years. The drop in factory output disappointed expectations for a 0.1% rise in manufacturing and declined from the revised 0.3% rise in production in December. US Industrial Production declined 0.3% January, which was the biggest decline in more than a year and disappointed expectations for a 0.2% rise in industrial output. Also, capacity utilization fell from 78.9% in December to 78.5% in January.
The ISM Manufacturing index also fell to an 8-month low in January at 51.3, and Non-Farm Payrolls disappointed expectations in January by only expanding by 113 thousand jobs. Disappointing US data is important for dollar traders because of the implication on the pace of QE taper. Fed Chair Yellen said earlier this week that a notable change in the outlook for the economy could prompt a slowdown in the taper pace.
That's why the US Dollar declined about 10 pips against the Japanese Yen following the release. USD/JPY may next find support by the