JPY Trading Outlook (09-10-2014)

USD/JPY Traders got double-crossed in USD/JPY today. They were initially induced to cover shorts after Abenomics architect Kozo Yamamoto called for fresh BoJ easing and delaying next year’s VAT tax hike until ’17. Lack of serious progress or a close below 108, with importers taking advantage of the dip to 107.75, was already beginning to lift prices in NorAm trading, eventually running stops above offers at 108.50-55 and above the daily Cloud top in EUR/JPY at 137.18. A recovery in equities & yield spreads got USD/JPY to a 108.74 high before the Fed Minutes crushed the buck and Tsy yields, but gave equities an extra leg up. The Minutes ought not have been a shock to anyone who listened to what Dudley and others have said since the last meeting, but some were shocked nonetheless. USD/JPY fell to 108.06 before the shock wore off and the surge in N225 futures began to offset the slide in USD-JPY yield spreads. We may yet to a reversion to the 200-HMA by 109.10, but getting above the 110.09 peak looks doubtful until or unless we here the BOJ itself talking about seeing potential for further QQE. Crossed bounced, AUD/JPY from by its 200-DMA.