JPY Trading Outlook (19-09-2014)

USD/JPY One last stab at the 109 barriers came up short in the wake of the 36k drop in Jobless Claims, but even with that news, US short-term rates began to lose altitude and the USD with it. As has been the case for a some time, pullbacks in USD/JPY were limited, this time to 108.60. Nikkei futures retained their gains and are closing in on the Dec 31 Abenomics peak. The Topix already made new highs. The weaker yen will inflate some exporters profits and the value of earnings overseas, but it is unlikely to reverse the established trend of moving production overseas. Regardless, FX markets is mostly focused on CB balance sheet comparisons & nominal yield spreads, which make the JPY a favored short; at least while the broader risk-on flows persist in the majors. 110 is the next target beyond the 109 barriers. EUR/JPY got a fresh lift on the EUR/USD’s post-FOMC recovery, regardless of the weak TLTRO take-up. The cross has cleared its 200-DMA, down TL fm ’13 & 1’4 highs, the weekly Kijun line and the weekly Cloud top, all in the 139.00s. The next historical and tech hurdles are clustered around 141. GBP/JPY is at 6-yr highs into the Scottish vote count.