JPY Trading Outlook (08-10-2014)

USD/JPY The yen was well bid amid another round of global de-risking that, though led by European equity and peripheral bond losses, also claimed Japanese, US others’ equity setbacks. That 2-yr Tsy yields fell for a second day after Fri’s huge NFPs beat showed that concern is increasing about weakness outside the US feeding back to the domestic economy. Moreover, PM Abe, whether for domestic political considerations or not, again noted concerns about the cons of a falling yen perhaps outweighing the pros. Even the BOJ is beginning to sound less resolute about reflation progress in the wake of the VAT hike this year, with another on the docket for next Oct. A 4% plunge in German Aug IP rattled EUR/JPY down to 136.56, just below the lower 21-day Bolli, where nimble spec shorts booked some profits. As this stage, prices remain below the daily Cloud base at 137.09. A close below there would reinforce the negative techs and keep the Aug-Sep lows at 135.73/82 in play. USD/JPY is hovering just above the Oct 2 low & daily up TL fm Aug at 108.01-02 & likely to close below the 21-DMA at 138.39. 5.5bln in 107.50 NY expiries eyed on Wed. JPY Trade tonight.