JPY Trading Outlook (26-09-2014)

USD/JPY Risk hit the skids in NorAm trading, sending the yen higher, particularly against the high betas, while USD/JPY trundled back toward Wed’s lows before finding support. Reports of terror attacks being planned against French and US railways hurt, while a few more doubts crept into the minds’ of traders regarding just how much tightening the Fed could do next year. The seed was planted by Fed’s Dudley on Monday and nurtured since then by other Fed members, including Lockhart today. More specifically, the Fed seems to be trying to link USD strength with less potential room for normalization. Period-end and holiday sapped trading in NY produced accentuated profit-taking in assorted risk trades. USD/JPY’s uptrend remains stymied by barriers at 109.50. It’s also propped up by bids above 108. The Tenkan at 108.13 hasn’t been touched since the 8th. Rumors about GPIF reforms made the rounds, but they appeared to misunderstand that reallocation can go ahead without fresh legislation. EUR/JPY broke its Kijun & 50% Fibo at 138.52; 21-DMA next target. NZD/JPY, & its linkage to equities/risk, is being watched for possible broader risk-reversal confirmation. CPI tonight.