JPY Trading Outlook (03-12-2014)

USD/JPY The day was pretty much over for the USD/JPY after the first two hours of NY trading extended o/n gains to 119.28 (7-yr high) on the back of rising N225 futures and Tsy yields. The USD was generally bought as the slide in commodities resumed after Monday’s dead cat bounce in energy. Reuters reported on very bearish comments by the former Saudi intelligence chief re the market share war now underway in oil. The plunge in oil prices is a relief for Japan’s inflated import’s bill, but real wages were down 2.8% y/y in Oct as cash earnings slipped to just 0.5%. Japan’s main labor union is said by Kyodo to be readying a 2% pay rise request for 2015; that as the Abe govt twists Japan Inc’s arms for wage increases to restart the hoped for virtuous cycle of higher wages, higher spending and higher prices. On the day, decent offers at 119.25-35 flattened out USD/JPY’s early advance, but demand is relentless and evident in the ever shallower pullbacks on intraday charts. All eyes are on 120 heading into the NFP report Friday, particularly after the solid ISM report Monday. EUR weakness dragged EUR/JPY away from nearing the Nov 21 high & daily pivot pt at 148.43.