JPY Trading Outlook (23-09-2014)

USD/JPY Consolidation of the USD/JPY uptrend was reinforced by the broader risk-off start to the new week that pushed equities and Tsy yields lower. The 108.67-109.20 range fell within Friday’s wide, thus averting a simple daily pivot pt reversal below last Thur’s 108.32 low. Dudley’s comments downplaying the Fed’s dots and much-weaker-than-f/c US Existing Home Sales also dampened dollar demand. Though the yen is indisputably overdue for a technical rebound, the M-T macro view remains quite bearish. In all likelihood, PM Abe will go ahead w next year’s consumption tax hike, despite weaker-than-expected growth and inflation this year, which will place more pressure on the BOJ to up QQE, while GPIF does its part by selling JGBs and buying stocks and foreign assets. A holiday Tues in Japan should keep dealings light tonight. EUR/JPY took its cue from sinking stocks and Draghi’s latest promise to use unconventional tools to fight increasing downside risks to the region’s economy. Still holding the weekly Kijun at 139.60 and the broken dn TL fm ’13 highs at 139.52 at this writing. EM/commodity crosses getting hit as China woes spread. JPY CPI on Friday.