JPY Trading Outlook (19-06-2014)

USD/JPY There was widespread USD selling after the mkts realized, for a second time, that higher Fed Funds (dots) estimates do not mean the Yellen Fed is yearning to raise rates. In fact, in Chair Yellen’s presser it was clear there are far fewer scenarios that would lead them to tightening quickly or with gusto, than there are ones that would leave the low for longer mantra in place. Tsy yields fell enough to yank USD/JPY to it’s session lows below 102. The day’s fleeting 102.38 high was inspired by the higher dots. The pair is at new lows as we write this, which shows there’s so much doubt about Fed normalization and higher rates that even a rebound in the N225 futures couldn’t stop the USD/JPY rot. Tues’s 101.81 low and the Tenkan at 101.80 are nearby support. 101.57-61 is key on a closing basis. Today’s weak close after another probing of the daily Cloud above will tend to reinforce the bearishness of its presence. Lousy Japanese Trade data, particularly the first y/y drop in Exports since Feb ’12, leave the BOJ and Abe with more work to do. The dovish Fed read gave high-beta yen crosses a lift. Carry and risk-on until the Fed gets serious.