JPY Trading Outlook (25-07-2014)

USD/JPY Rising L-T Tsy yields, weaker-than-f/c Japanese Trade and Markit PMI and US Jobless Claims tumbling to 2006 lows gave the oversold rebound in USD/JPY prices the ammo needed to clear last week’s highs by the 61,8% Fibo at 101.80. Upside beyond there was chastened by a horrendous US New Home Sales slide and downward revision that was led by a drop in the NE vs the plunge in Southern Housing Starts reported last week. That and a mediocre US Markit PMI result sapped the USD rally of momentum into the London close. Nonetheless, most of the day’s rise in Tsy yields and the USD were maintained and USD/JPY is being drawn toward the converging 100-, 200-DMA, upper 21-day Bolli and thin Cloud at 101.90-102.10. CPI and MOF flow data are on tap from Japan tonight ahead of Durable Goods Orders from the US Friday. Econ Min Amari’s fiscal “tightrope” walking comments were meant to scare some money out of ultra-low-yield JGBs and into equities, but so far only front-end yields are bouncing. NZD/JPY’s break of its 2-yr up TL (87.63) bears watching, as does bear trap risk below the Cloud. O/S rebound underway in EUR/JPY on PMIs.