JPY Trading Outlook (04-09-2014)

USD/JPY There wasn’t enough momentum or fresh justification to push USD/JPY up to and through its 105.45 2014 peak o/n; not with the market so heavily short the yen/long the USD already on the eve of the ECB & BOJ Thur and Fri;s US NFP. Abe’s new Cabinet was as leaked and his speech kept alive speculation more BOJ easing will be needed at some stage and that GPIF reallocation away from overweight JGBs will occur. Not a new story by any means. Japanese exporters were noted to have offers ahead of the 105.45 peak and 105.50 barriers/buy stops, having budgeted for closer to 100 this year. Softish second-tier US data, a fresh round of Tsy buying, after a back-up to start the week, and Nasdaq-led US stock losses dragged on USD/JPY in NorAm trading, as did doubts about any Ukraine cease fire, as was rumored o/n. Beige Book and Fisher’s comments were innocuous. Bids at 104.80-85 and a more at 104.35-45, but are stops below the latter. Main trend is up. EUR/JPY rallied on the Ukraine cease fire speculation and Lautenschlaeger’s comments that Draghi’s JH speech was about structural reforms. Daily Cloud top pierced, but closed well below. No change exp fm BOJ.

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