JPY Trading Outlook (30-10-2014)

USD/JPY The calm before the FOMC storm in the NY afternoon saw USD/JPY hue closely to the sizeable 108 options expiries at the 10ET cut amid subdued pre-FOMC trading, but with a slightly USD bullish & JPY bearish bias. The USD’s broad post-FOMC rally sent USD/JPY well past noted exporter offers at 108.40-50, with the 108.95 session high completing a 76.2% retracement of the Oct wide at 108.93. A further rise to at least the upper 21-day Bolli band, last at 109.55 and falling, is a fair bet. Above-f/c Japan IP & RS this week have lifted local spirits (N225), while perhaps reducing the prospect of QQE2 by the BOJ, though no major policy changes are expected at Friday’s meeting. The Reuters story that GPIF has already reduced JGB holds to below 50% (lowest ever) suggests the reallocation timing debate may be moot. High-betas lost ground to the yen after the FOMC caused further retracement of the mid-Oct plunge in expected rate hikes next year. AUD/JPY’s 96.27 high was rejected by the daily Cloud base & upper 21-day Bolli. EUR/JPY breached 138 before sliding to a tick below the o/n lows. Weekly investment flows tonight; US GDP tomorrow.