JPY Trading Outlook (17-11-2014)

USD/JPY The NY day began well for USD/JPY. US Retail Sales were above f/c and revised upward, giving prices a lift to the 116.83 session highs, where AXJ names were said to be fading the move, looking for a quick trip back to 116.00 to take profit. There was a second rally attempt after the strong TR/UM report, but the dollar ran into widespread selling between 10 and 11 ET, led by short p/t and covering in EUR/USD. Initial comments from Fed’s Bullard also were construed as USD bearish, but he later reiterated his view that rates will begin to rise by the middle of next year. Failure to take out the 117 barriers, after running stops above 116.50 barrier in early NorAm trade, also left USD/JPY longs looking to lighten up a touch ahead of Monday’s Japan GDP release, as that report, assuming it’s not much stronger than forecast, is expected to allow Abe and the LDP coalition to call early elections and at least delay next year’s VAT rise. EUR/JPY surged beyond the Dec ’13 peak at 145.67 amid the EUR/USD short squeeze. Some see the huge spec short EUR positioning as kindling for more of the same on top of the QQE2 and GPIF driven yen selling flows.