JPY Trading Outlook (10-07-2014)

USD/JPY An upward drift in Tsy yields after late NY/early Asia lows underpinned USD/JPY into the FOMC Minutes release, the expectation being that they would reveal a bit more of the hawkish view than the overall Fed statement. Such was not the case. There might have been some superimposing of last week’s strong NFP result on an event that predated it, leaving specs a bit longer of USDs than they ought to have been into the release. USD/JPY’s fleeting spike up to 101.85 was followed by a slide to 101.54 as Tsy yields fell off. Stocks, on the other hand, have led up, which has reduced the covering of yen shorts and left USD/JPY in its well-worn and ever-compressing trading range above the 233-DMA at 101.40. Abe advisor Honda joined most on the Street in suggesting the BOJ doesn’t need to do QQE2 because the hit from the sales tax hike was not destabilizing. Reuters reported sources say the BOJ might lower its economic assessment due out with next week’s policy meeting. Vols remain by historical lows as traders await enough divergence in CB policies to force a breakout. Crosses firmed after the FOMC Minutes. Weekly flows, Corp Prices & Machine Ords Thur.