JPY Trading Outlook (30-07-2014)

USD/JPY The thin daily Cloud was finally cleared, along with 102 options/offers and the 200-DMA at 102.10. Nikkei gains and demand for longer-term Tsys were the main drivers. A 4-bp rise in US 2-yr yields due to the roll gave front-end traders something to ponder, as did a big jump in US Consumer Confidence. Net spec yen COT shorts are back down to where they were in late ’12 when USD/JPY traded in the lower 80s, but prices will have to break beyond this year’s down TL, Wed at 102.35, on the back of strong US data and growing expectations of Fed tightening to bolster bruised buyers. The last five daily cloud breakouts were short-lived, spending little or no time beyond the upper 21-day Bolli band that’s now expanding toward the ’14 down TL noted above. June Japan IP tonight will set the stage for US Q2 GDP, July ADP and the FOMC announcement ahead of Friday’s NFP. 1-mo vols perking up from record lows, but there’s no clear reversal of this year’s downtrend yet. EUR/JPY fairly stable despite fresh EU sanction against Russia. Month-end rebalancing flows a modest offset. Carry/commodity/EM’s crosses struggled under their own weight.