JPY Trading Outlook (10-09-2014)

USD/JPY Despite the protestations by Japan’s Econ & Fin Mins that the pace of the yen’s fall should be less volatile, it’s clear neither the Abe govt nor the BOJ are interested in talking the yen back up. They don’t want to be perceived as cheerleading its retreat is all. In any event, judging by comments from Japan Inc reps, the speed of the USD/JPY rise this year has in fact taken many of them by surprise, particularly importers. Exporters are feeling less compelled to sell into rallies, instead holding off as much as possible and until signs of meaningful top develop. Below f/c Japanese economic data have extended into Q3, the qtr Abe says will be key for assessing whether to hike taxes again next Oct. As to resistance, the TL drawn across the May ’13 & Jan ’14 highs is at 107.36 last, though most trade recs we’ve seen from banks are looking for 108-110. USD-JPY 2-yr yield spreads continue to drive the pair higher, even while the Nikkei lags. EUR/JPY rebounded to its daily Cloud base at 137.52 after running stops above 137.05 hurdles. Cloud top at 138.18 is key on a closing basis. EM & commodity crosses were widely hit. PPI & Machine Ords tonight.