JPY Trading Outlook (12-11-2014)

USD/JPY Stories about Abe likely calling for a snap election and also delaying next Oct’s VAT hike gave USD/JPY the punch it needed overnight to print a new, multi-year high of 116.11. But that pair began to diverge from rising EUR/JPY and other yen crosses during the NorAm session as the EUR and higher beta ccys recovered against the USD. Japan’s monthly MOF investment data and the ECB’s weekly balance sheet offered EUR/JPY bulls a leg up, as MOF flows favored EZ core bonds and the ECB’s balance sheet contracted E22bln last week due to faster bank ECB loan repayments than new ABS purchases by the ECB. While these were superficially bullish for EUR/JPY, lifting it to a new high of 144.34, both EUR/JPY and USD/JPY came in for corrections toward the end of the NY holiday-thinned session. AUD/JPY surged to 100.47 and looks headed for 100.6/7, where recent & L-T Fibo targets coexist. All eyes are on Japan’s GDP report on Monday as possible trigger for official confirmation of Abe’s snap election and tax hike plans. Data calendar in Japan, EU and US heats up again the last two days of this week.