JPY Trading Outlook (03-09-2014)

USD/JPY The gap on this year’s 105.45 high in USD/JPY is rapidly being filled. 105 had already been breached before the NorAm session began. Stellar US ISM results flushed out stops just north of that figure for a 105.22 high thus far. Also cleared today was the ancient down TL from the ’98 and ’07 peaks at 104.78. That just leaves 105.45 and the 61.8% of the ’07-’12 crisis tumble at 105.49. Talk of barrier defenses there and stops beyond. Many banks are now looking to 110 as a M-T target. Surging Tsy yields and Nikkei prices underpinned USD/JPY amid speculation Abe’s rumored new Welfare Minister will back major GPIF reallocation shifts. A Nikkei story late in the NY session cast some doubt on how much influence any such shift might have. Note that some are betting against the yen because they see the ball falling back in the BOJ’s court to revive reflation efforts, while others worry the yen could slide due to worsening finances and rising trade deficits. Even the widely detested EUR made a nice comeback v the yen today, trading beyond the Aug 1 range high of 138.07. Lots of angst among EUR shorts into Thur’s ECB. Yen still seen a safer short.