JPY Trading Outlook (13-11-2014)

USD/JPY Yet another USD/JPY pullback was bought into by NorAm and late London participants, this time after a brief dip below 115. A nasty setback in GBP/JPY following the lower BOE inflation outlook may have had some crossover into the other yen pairings, particularly EUR/JPY. Risk appetites rebounded in NY, despite reports of increasing Russian troop movements into Ukraine and ECB’s Weidmann again disparaging outright QE, while paying lip service to balance sheet expansion otherwise. On the Japanese front, reports have come far and wide about Abe calling for a snap election next month and possibly delaying the next VAT rise. QQE2 and the GPIF reallocation remain ambient yen negatives, regardless of the election timing or the VAT hike, which most expect to be resolved after Monday’s GDP release. Unease before then, and amid a slew of Japan data tonight, may temper the USD/JPY’s rise somewhat, but there is no sign of a top yet and most are looking for 118 as the next objective. Also tonight we get the latest weekly Japanese investment flows, with more hints at the pace of GPIF reallocation.