JPY Trading Outlook (15-07-2014)

USD/JPY The general rebound in risk from overnight carried through to NY, pushing USD/JPY toward last Thur’s breakdown session high & the daily Tenkan at 101.66. A modest rebound in Tsy yields & the Nikkei were not enough to knock to clear 101.66 the day before Yellen’s Capital Hill testimony and the BOJ meeting ends with revisions to their economic forecasts. There was talk of a Japanese paper having a story about the BOJ potentially raising their growth outlook, which would be in contrast to most forecasts for no change or perhaps a slight reduction. In any event, no major policy changes are expected Tuesday, though the mkts will watch for further arm-twisting by the Econ Min for the BOJ to do QQE2 later this year. With JGB yields back down at pre QQE levels and the Nikkei’s 10% recovery from May lows doing little to lift USD/JPY prices, one has to wonder what would trigger a major yen slide, short of QQE2 or a serious uptick in core, domestic inflation. Cloud base & 200-DMA near 102 are major hurdles this week. PKO-related bids are touted either side of 101. Prior past Japanese buying of OATs failed to lift EUR/JPY. It’s up to ECB. Mid 139.00s rsst