JPY Trading Outlook (09-12-2014)

USD/JPY fell from a 7 year high of 121.86 in Asia, that being a vestige of the post US NFPs rally Friday. It became clear that once Asia had caught up to that news and was digesting unexpectedly bad Japan GDP and Tankan news, the new USD/JPY peak would not be retested this session, as Nikkei futures failed to make new trend highs and trended lower. US Tsy yields also fell, with a major curve flattening bias amid broader derisking and Fed speakers adherence to mid-2015 tightening window. With the EM meltdown on oil and a rising USD spilling over the DM equity markets today, the yen’s haven identity came to the fore, taking USD/JPY back down to where it was before Fri’s NFP surge. Prices pierced the up TL off the Dec 1 & 4 lows, then at 120.43, before finding support at 120.20. Most of the major option expiries into year-end are at or near 120, while the key daily Tenkan support is at 119.55 last. A daily close below there is needed to trigger a deeper correction. Speaking of Tenkan’s, EUR/JPY’s at 148.11 warded off today’s 148.20 low. Thur’s TLTRO results may add a new wrinkle for EUR/JPY. Hi beta crosses remain heavy on risk-off flows.