JPY Trading Outlook (25-09-2014)

USD/JPY Holding USD/JPY down is like keeping a beach ball underwater. Abe gave it a whirl o/n noting on Jiji that he needed to closely watch the impact on Japan’s regional economies from a weakening yen, while Dudley, Yellen and others have tried to play down the Fed’s dots since the last meeting, and Dudley noting a big USD rise could affect monetary policy (delay tightening). In the end, with Tsy yields and equities rebounding today and US Aug New Home Sales growth exploding 18% m/m, USD/JPY resurfaced above the down TL from last week’s highs and breached Tues’s 109 high, if only marginally thus far. Even if the Fed drags their feet on rate hikes, they’re competing with a BOJ that’s not going to stop QQE any time soon and is certainly not going to raise rates next year. 109.50 and 110 barriers are the topside targets. EUR/JPY ran sell stops below 139.20/15 (weekly Cloud top & 38.2% Fibo) on worries the ECB is running out of options to rebuild its balance sheet, in part, as an S&P report noted, due to growing political opposition in Germany. 139 held, though, so damage was limited. Aug Corp Services Prices out of Japan tonight, CPI Friday.