JPY Trading Outlook (19-11-2014)

USD/JPY With the snap election and VAT rise delay behind us, the focus is on tonight’s BOJ meeting. While the Oct 31 QQE2 launch now looks even more appropriate due to the lousy Q3 GDP report, the committee might feel somewhat double-crossed by the VAT hike’s 18-mo delay, as many saw QQE2 as a quid pro quo for next year’s hike. This will make the spilt on tonight’s vote to retain the freshly-minted QQE2 interesting. The market clearly expects QQE2 to persist, otherwise the yen would not have weakened across-the-board today, even vs the USD, which came in for profit-taking led by EUR short-covering. A double-top by 117.06 this week gives techs some cause for pause, but the pullback from there was muted. Though US PPI & NAHB were above-f/c, this didn’t help Tsy yields or the USD much. Decent bids noted 116.35-25 (latter the hourly Cloud base), but 115.45 is the daily on-close pivot pt from Monday’s low. The pivot pts have held since the Oct 15 nadir. More talk about QE from the ECB today after a surprise rebound in the ZEW o/n squeezed EUR/JPY to a new trend high of 146.69. Fibo-projected top at 147. New GPIF CIO well received.