JPY Trading Outlook (19-08-2014)

USD/JPY The yen was weaker against all the majors save for the CHF to start the weak. That was a continuation of the theme from last week that was rudely interrupted on Friday by headlines out of Ukraine. But as the new week began, the worries about Ukraine ebbed and the search for risk and returns resumed. Today’s modest USD/JPY gains were aided by the firmer-than-forecast US NAHB results. Now comes the hard part as offers from 102.70 to 103 are approached. Japan’s July Dept Store Sales and Machine Tool Orders are out tonight. The Nikkei’s recovered pretty well from the Aug 8 lows despite very mediocre econ data, in part on hopes the yen will weaken over the medium-term as the BOJ and Abe govt consider fresh reflation options. Bidders camped out at 102.00-20, with yards of expiries this week between 102 & 103 and only some increase in 1-mo implied-historical vols spreads backing a breakout. Most await Jackson Hole speeches on Friday. GBP/JPY’s rebound off the 200-DMA got a lift from Carney’s latest implied policy tweak. Major resistance is the daly Cloud base and Kijun at 172.42/47. EUR/JPY is consolidating.