JPY Trading Outlook (16-07-2014)

USD/JPY US econ data gave USD/JPY a brief bounce into the Tenkan & last Thur’s 101.66 high. The failure there left prices drifting lower into what was expected to be dovish testimony by Fed Chair Yellen. And though Yellen burnished her reputation for erring on the side of easing, she also made the allowance that if the jobs data continue to improve faster-than-expected, policy could be tightened sooner and more forcefully. She note the high uncertainty of econ f/cs, but the main take-away was that data-dependency persists and there is risk for being caught long Tsys, particularly at the short end, and short USD, particularly vs the yield-sensitive JPY. In the end, 101.66 hurdles and stops were cleared, but offers at 101.75 (21-DMA) held. EUR/JPY faltered near the converging 21-, 200-DMAs and Tenkan by 138.40. The first dip was on the weak ZEW, but a slightly more hawkish Yellen reminded all that dwindling EZ yields and NIRP by the ECB may finally grant the ECB their wish of a weak ccy. The BOJ nipped a tenth off their FY14 GDP f/c, but still see CPI up 1.9% in FY15 vs private f/cs of just 1.1%. GBP/JPY rallied on UK CPI’s rise, other crosses struggled. No Japan data Wed.