JPY Trading Outlook (16-10-2014)

USD/JPY Big expires at 107.00/20 in NY were no match for USD/JPY selling pressure generated after US Retail Sales, Empire & PPI were all weaker than forecast and another Ebola case was confirmed here. Tsy yields disintegrated. 2-yr Tsy yields were down over 13bp at one point and only 4.3bp from the 2013 low of 20bp. 1-month vols surged to their highest since Feb. Sell stops were run under 106.65/50/00 and 105.50, but macros began an intraday rebound near 105.20 that retraced half the day’s slide before selling resumed. The daily Cloud top will be at 105 Thur to make that level even more pivotal. Talk of Japanese corporates also keen on 105 support holding. N225 futures are down 1.74% at this writing, but are -10.45% on the year in a clear affront to Abenomics. GPIF independence the talk o/n, but global deleveraging is making being long the Nikkei or short the yen a tough call now. A moderate Beige Book and talk of Yellen being reasonably upbeat on the US economy haven’t done much for USD/JPY or risk sentiment. EUR/JPY’s threatening a weekly Cloud break; 135 pivotal. GBP & CAD heavy losers to the yen today. No Japan data tonight.