JPY Trading Outlook (03-03-2015)

USD/JPY Judging by the price action today, the market was simply itching to buy USD/JPY unless US data were horrendous. After the release of below-f/c ISM and much-weaker-than-expected Construction Spending at 10ET, USD/JPY rallied from 119.68 to beyond reported barriers and exporter offers at 120 for a 120.16 high thus far. Tsy yields climbed at the same time, providing the incentive for the USD’s rise. Some of the Tsy yield rise may have been rate-locking ahead of massive corporate issuance. Also heard HFs were doing some new-month switching from fixed-income ETFs to equities. US Core PCE was steady and the rest of the related data close enough to f/c to keep money markets looking for a 25bp rate hike by Sep. Unless that baseline assumption is degraded by far worse-than-f/c US data, starting with this Friday’s jobs report, the USD will be bought vs ccys with CBs doing QE and/or with lower interest rates. USD/JPY is approaching the dn TL off the Dec 23 high, Tues at 120.35, and offers into 120.50 and nearby Feb high. EUR/JPY is trying to build a base above the Kijun, 50% Fibo & Thur & Fri’s lows at 133.43-45. JPY Jan Labor Earning are out tonight.