JPY Trading Outlook (13-03-2015)

USD/JPY & Tsy yields sank following the huge downside miss in US Retail Sales, but buyers were ready to scoop up that discount to 120.655 (just below the Tenkan & 50 % of the Mar range at 120.71). A big drop in Jobless Claims and some discounting of the RS miss due to poor weather, ltd downside in the dollar, while the softer Tsy yields helped stocks and drove N225 futures to their highest since Apr of ’00. USD-JPY 2-yr spreads remain a bit of a drag on USD/JPY, but perhaps less so given that a portion of the Tsy buying and JGB selling these days is from Japanese pensions reallocating. Japanese stocks are being driven higher partly by BOJ ETF buying, but mostly by record corporate profits from multinationals. Exporter offers remain into 122, with buy stops touted above this week’s 122.04 trend high. The BOJ is unlikely to launch QQE3 in H1, so the existing policy divergence with the Fed will have to suffice for now. The ’07 pre-GFC peak at 124.14 is the marquee M-T hurdle. EUR/JPY’s plunge paused today after the lower 21-mo Bolli by 127.50 was neared. AUD/JPY’s 50% Fibo base Wed got help from AUD & CNY econ data. JPY IP/CU are out Fri.