JPY Trading Outlook (08-09-2014)

USD/JPY There was no danger of the o/n high at 105.71 being retest in NorAm trading after NFP missed badly. USD/JPY fell to the up TL off the Aug 28 lows, then at 104.68, before recovering beyond 105 as the shock of NFPs wore off and the drop in yields helped revive Nikkei futures. Most of the Street is reserving judgment on whether the Jobs report marks more than an overdue correction in that series’ recently hot run. By day’s end, the long end of the Tsy curve had steepened again, while short yields nursed a minor slide. By breaching the 61.8% of the ’07-’12 slide at 105.49 today, the technical door has been opened for higher prices medium-term. It’s clear there was more hedging done against downside USD/JPY risk than upside and the mkt, particularly importers, are playing catch-up. NFP’s inject S-T insecurity for a mkt heavily spec long, but calls for 108-110 from banks don’t look out of line, particularly if the BOJ is willing to trade more QE for another consumption tax hike. EUR/JPY nearly retested its 135.73 trend lows after the NFPs hurt USD/JPY. CAD/JPY neared several key hurdles near 97 o/n. Soft CAD jobs data reversed post high slide.