JPY Trading Outlook (12-09-2014)

USD/JPY In the NorAm session, USD/JPY’s 106.65-107.20 range came on the backs of above-f/c US Jobless Claims, that softened prices, and from BOJ Kuroda’s live appearance on Japanese TV that reiterated the bank’s policy line that the USD/JPY’s rise is due to divergent Fed & BOJ policies. He also said the BOJ’s wouldn’t hesitate to ease further, but he didn’t see the need to do so. And while admitting that econ data have been weaker-than-expected since the Apr tax hike, he said steady progress is being made in meeting their price target. USD/JPY rallied to 107.20 session highs after his appearance, but general risk-reduction mood in the market dampened demand. The bottom line is the BOJ is on hold, and either inflation will rise toward their 2% target over time, thus reducing real Japanese yields and weakening the yen, or the BOJ will launch QQE2, which would also be bearish for the yen. 107.36 TL resistance from last year’s highs is in focus heading into Friday’s JPY CU, IP & another Kuroda outing, as well as US Retail Sales. NFP & Claims misses increase scrutiny of other Aug US data into the FOMC next week.