JPY Trading Outlook (21-08-2014)

USD/JPY The yen was the best funder today. USD/JPY cleared the late July peak at 103.15 in Asia and then surging again after the FOMC Minutes showed recognition of the firming labor market increasing and more concrete tightening steps being worked out. Prices initially stalled at 103.41 into the NY open, but have been as high as 103.75 since the Minutes. The April 4 swing high at 104.13 is the next historical hurdle, though we suspect the die has been cast for a retest of the Abenomics peak at 105.45 and perhaps the 61.8% of the post-crisis slide at 105.59. The weekly Tenkan is poised to cross back above the Kijun next week after prices probed the Cloud below in July & Aug but couldn’t retest the May lows. And unlike previous ’14 rallies, this one comes with the daily Tenkan & Kijun lines above the daily Cloud, rather than inside or below it. Japan’s Trade deficit was above f/c, but solely due to the unexpected rise in Imports. EUR/JPY & most other yen crosses rebounded today, though GBP/JPY may be the most interesting case coming off failed 200-DMA probes and a split MPC rate vote. Daily Cloud base at 172.42 is key above.