JPY Trading Outlook (31-10-2014)

USD/JPY The big buyer of 1-wk 110s noted in this morning’s Briefing was onto something. USD/JPY surged to 109.47 today with some help from stories about aggressive GPIF reallocations in the NY afternoon, apparently linked to Nikkei. That move to new session highs came after a spike up, then down, as the US GDP report initially encouraged buyers with a HL beat, but then disappointed them upon inspection of the growth components and subdued inflation. While N225 futures and USD/JPY prices made new highs on the GPIF story, USD-JPY 2-yr yield spreads couldn’t come close to doing so, which took some of the wind out of the market toward the close. Exporters remain camped out by 109.50 and ahead of 110 (stops above), but bids from importers and specs have been trailed up to the 108.70-80 range. All eyes now shift to the BOJ tonight, with new econ f/cs, amid a plethora of Japanese economic releases, including CPI. The BOJ are expected to cut GDP f/cs, but are seen holding to their 2% CPI target, though with a less stringent timeframe for achieving it. EUR/JPY got a pip above Wed’s high before slipping back toward the close. Other crosses are firm.