JPY Trading Outlook (08-12-2014)

USD/JPY If USD/JPY bulls had any doubts about keeping, or even adding to, their trades coming into today’s US Jobs report, they had none afterward. With the one caveat of a weak Household Survey, almost every other aspect of the Nov report was tailor-made to send Tsy yields and the USD higher. USD/JPY buyers made short work of 121.00 and 121.50 barriers, clearing the final 76.4% Fibo of the entire ’02-’11 slide at 121.06 along the way. Offers at 121.70, that echoed ones at 120.70 earlier in the day, finally put a lid on the advance for the day as the Ldn week ended. There isn’t much historical or technical resistance beyond some 122 expiries and barriers until the July ’07 high at 123.67, the ’07 Jun peak at 124.14 and the 161.8% Fibo-projected top derived from the Jun ’13 low and Jan ’14 high. 2-yr Tsy yields finally cleared the ’08-’09 lows by 61bp that they had been capped by for the last six months, suggesting game-on for a few rate hikes in ’15 & ’16. Versus the BOJ’s QQE2 and the lack of influence on JGB yields from rating agency downgrades, the c124 technical objectives look well within reach. EUR/JPY & GBP/JPY made new 6-yr highs due to heavy yen selling.