JPY Trading Outlook (14-07-2014)

USD/JPY Trading was far calmer on Friday as mid-week derisking flows subsided pre-weekend. CAD/JPY was the outlier, falling after Cad Jobs data. Fin Min Amari making a not-so-veiled threat toward the BOJ to ease again soon to reach its CPI targets, as USD/JPY threatens key support in the 100-101 range that Japan Inc have budgeted for this year, may give dip buyers hope, but also raises 3rd arrow red flags. Nonetheless, the pattern of successively lower price rebounds since the turn-of-the-year peak at 105.45 and JGB yields now having erased all of their post-shock & awe increases are reminders that labor shortages are not likely to be any more helpful to the Japanese economy in the long run than the spike in imported energy costs last year. Will an eventual, sustained rise in US rates lift USD/JPY out of the doldrums or will that simply put more pressure on leveraged asset prices, many funding with cheap yen? In any event, USD/JPY & EUR/JPY are closing the week below their weekly Cloud tops at 101.57 and 138.36; the first such incursions since late 2012. BOJ’s meeting ends Tues. No change expected. IP & CU out Monday. Late word of 6.8 quake in E Japan. (RD).