JPY Trading Outlook (16-02-2015)

USD/JPY Thur’s swift USD/JPY drop found support Fri by the 200-HMA and Tues’s 118.40 low; a low that is also the daily on-close pivot pt. Prices are well above that pivot heading into the close, despite another bearish US data surprise today; this time from the U of M Consumer Sentiment indices. Trading in the States was subdued by the long holiday w/e that many extend into Friday. A poor 5-yr JGB auction kept the discussion going about how much the BOJ’s QQE program is distorting that market, but the general sense is that the Kuroda-led BOJ will keep its easing options open later this year. There’s no risk of a policy shift at next week’s meeting, and the Fed is still being priced to begin raising rates very gently in H2, mostly because of the removal of slack from the labor mkt. USD/JPY didn’t get much help for Tsy-JGB spreads this week, but the N225, which USD/JPY has a 60-day log corr of 0.8 to, remains near Abenomics highs. EUR/JPY slipped a bit Friday, but the likelihood of more EU-ECB-Greece can-kicking next week has kept prices above the 21-DMA for three consecutive sessions & targets by 137.65 still beckon. Japan GDP, IP & Trade next week.