JPY Trading Outlook (29-10-2014)

USD/JPY A soft US Durables report cut the legs out from under USD/JPY’s London session rebound to 108.17, but the 107.69 lows were attractive enough for macros and Japanese buyers given the fairly steady Tsy yields and the option hedging ahead of 1.3bln of 108 expiries at 10ET. Home prices disappointed, but Consumer Confidence was so far above f/c that it forced USD/JPY to retrace nearly all of the early NY slide (the 107.69 low hitting the hourly up TL from the Oct 15 nadir). Now the focus swings back to the FOMC announcement Wed and the BOJ’s on Friday. Policy from both banks is expected to remains unchanged. The BOJ’s semi-annual f/cs are expected to features lower FY ’14 GDP and CPI f/cs, though the BOJ’s FY ’15 2% CPI f/c is expected to stay. Kuroda has noted there is no strict timeframe for the CPI goal, only that it will be met around FY ’15. Strong Sep Japanese Retail Sales may give the BOJ more credibility in their assertion the VAT tax hike impact is waning and growth is picking up again. 106.70-107.40 is the near-term USD/JPY range. EUR/JPY is right on the 50% Fibo & weekly Tenkan at 137.68 into close. Crosses rise w stocks & commodities.