JPY Trading Outlook (01-12-2014)

USD/JPY The USD was well bought and the yen well sold to close the week, driving USD/JPY beyond recent range-trading and exporter offers at 118.45-60 ahead of the London close and an early close in the States. Stops were run above 118.50. Exporters, who had several chances to sell in the mid 118.00 recently, had less to do today. The abbreviated US session and month-end truncated an attempt to retest the 118.98 trend highs from the 20th and the barriers/stops just beyond. Tsys were again in strong demand and data through mid-Japanese FY show the US remains by far the favored destination for Japanese real money investors. This week’s Tsy auctions featured massive indirect bidding that suggested foreign demand remains brisk, even if the weekly Japanese investment flow data haven’t shown that the last few weeks. That data have shown strong foreign demand for Japanese stocks, which remain highly positively correlated with USD/JPY. Mixed Japanese econ data today point to the need for ongoing QQE, which remains the primary driver of yen weakness. EUR/JPY ran stops above the last four days’ highs, but 148 couldn’t be cleared. Commodity crosses lagged.