JPY Trading Outlook (12-08-2014)

USD/JPY A rebound in the major equity markets from Friday followed through on Monday, bolstering the Nikkei’s rebound away from its daily Cloud base. But the bargain hunting in equities was not enough to get USD/JPY above exporter offers in the 102.20-25 range. Those offers were clustered below the 100-HMA, but more so below the Aug 1 low and the daily Tenkan line at 102.33. The 200-DMA was also at 102.30. Prices have been either side of that slowly rising MA since mid May. Tsy yields initially bounced slightly on hopes things may be getting better in Iraq, Ukraine, et al, but NATO said today that there was a “high probability” that Russia could intervene militarily in Ukraine. Some fear this could happen under the guise of an “aid” convoy. Bottom line is there remains plenty of uncertainty. Bids are at 102. Hefty spec yen selling in the preceding two weeks has been at least partly been pruned back since. Fri’s 101.51 low is said to guard barriers at 101.50. Japan’s Q2 GDP and US Retail Sales on Wed are the week’s main scheduled event risks. Biggest worry is Japan’s tax-hike hit is much worse than the BOJ or Abe expected. Kijun is key on close for EUR/JPY.