JPY Trading Outlook (20-05-2014)

USD/JPY The slow but steady erosion continues in USD/JPY despite hefty pre-tax-hike demand showing up in things like today’s Machine Tool Ords (+19.1% m/m). To some extent, the fact that so much demand was accelerated ahead of the April tax hike means that the drop-off in demand after the tax will be even greater. It may also mean there are doubts about next year’s tax hike happening or that reflation will be robust enough over the medium-term to make this year’s hike seem less important. Reuters’s story on changes coming to the GPIF management was not unexpected, and thus did little for either the Nikkei or yen bears. USD/JPY is close to the 200-DMA it broke at 101.23 today. Well-touted bids at 101.09-10 sufficed in this dreary session, but this is the second straight session wholly below the up TL from last June. Stops and barriers noted below 101 and 100.75 (100.76 the ’14 low). N225 quite close to its 13.885 ’14 lows, with it & USD/JPY trading below weekly Tenkan and Kijun lines now. Fed and ECB speakers did little to change policy perceptions. EUR/JPY eyes its 200-DMA & a 76.4% Fibo at 138 next. AUD/JPY’s back in the Cloud.