JPY Trading Outlook (06-02-2015)

USD/JPY EUR/JPY was the main driver again today, first weighing on USD/JPY and most yen pairs in Asia after the ECB Greek collateral announcement late Wed, and then rebounding after EUR/JPY failed to break Wed’s low and buyers swept prices back toward Wed’s high as Grexit risk receded and EZ econ data again showed the EUR’s weakness starting to lend a hand. The Greek issue is far from resolved, but the ELA extension/expansion at least creates some space for more talks. US data were mixed, with the net result a strong rally in stocks funded by a sell-off in Tsys. E-minis have been outperforming N225 futures this week, making USD/JPY gains harder to hold. Today’s 117.60 high is just shy of the Tenkan at 117.65. More supply is noted into the falling 21-DMA that capped Wed’s high at 118. And USD-JPY 2-yr yield spreads, despite higher Tsy yields, have been grinding marginally lower since Jan 22 as JGB yields have climbed faster than Tsy yields. GBP/JPY’s M-T bullish reversal made good progress today. It now faces the 100-DMA at 180.36 and 38.2% of the Dec-Feb slide at 180.87.