JPY Trading Outlook (01-05-2014)

USD/JPY: was on the rebound heading into the NorAm day, but was derailed by a huge miss in US GDP that overshadowed the 220k ADP result. The then hourly Cloud base by 102.30 had held in the wake of the BOJ meeting and local data releases, but the post-GDP dive from 102.64 took out those lows and eventually the daily Cloud base at 102.21 and the up TL off the April lows at 102.15. Upbeat Chicago PMI and an FOMC statement that was crafted to be as noncontroversial as possible persuaded some spec shorts that 102 figure support was safe for the day and booking profits was reasonable idea. That bounce has been modest thus far, not even reaching the Asia swing low by 102.30. Weighing on this and other yen pairs is the clear underperformance of the N225 futures vs the S&Ps. Windfall exporter profits will not be on offer for Japanese firms this year unless the yen begins falling in a major way again. The y/y % change in USD/JPY is +4.8% now vs +24% at the end of Nov & +28.2% last May. Japan’s PMI fell to 49.4 in April; its lowest since Feb ’13. Kyodo reported China & Russia will hold a military drill in May by the Senkakus. TPP talks persist.