USD/JPY headed to 111 the figure? - Scotiabank

Analysts at Scotiabank explained that stronger than expected core machine and machine tool orders provided modest JPY support.

Key Quotes:

JPY appears to be trading in tandem with the 10Y U.S.-Japan yield spread while ignoring fresh post-crisis highs in the 2Y spread. Risk reversals are steady pricing a relatively sizeable premium for protection against JPY strength, matching levels from early August and early September when USDJPY was trading in the 108-110 area. 

DMI’s are converging and USDJPY has broken below its 9 day MA (112.64). The 21 day MA (112.11) appears to be providing near-term support. 

We highlight the potential for near-term weakness toward 111 around the 100 day MA (111.12) and the 38.2% retracement of the September-October rally.