JPY Trading Outlook (22-07-2014)

USD/JPY recovered it’s intraday dip with help from higher short-term Tsy yields and reduction in equity market losses; the latter after President Obama took a reasonably low-key tone in his latest speech on MH-17 et al. UK’s Cameron was much more strident, but the mkts are sensing that the West will remain measured in their response. Most currencies are little changed to start the week, though the tone was a bit more risk-off overall and thus friendly to those buying yen dips. Offers are grouped at 101.45-50, 101.70-80 and 102.00. Local bids into 101 persist, with stops said below 101.95 and the next defense in the 101.75-80 range. EUR/JPY is digesting last week’s slide, but is this week below the 55-WMA, having already broken below the weekly Cloud top, Tenkan and Kijun lines. The ’14 low at 136.25 is pivotal. The IMF upped their ’14 German GDP outlook, but the mkt clearly remains concerned by the EZ’s economic outlook and the ECB’s ltd room for maneuvering on QE. US CPI & Existing Home Sales and the EU meeting on their response to MH17 are Tues’s main event risks. Japanese Trade and CPI are out Thur & Fri. Vols remain subdued.