TS Securities sold USDJPY at 109.50 on...>

DOLLAR-YEN: TS Securities sold USDJPY at 109.50 on Thursday, with a stop at

112.10 and a target of 105.00.

- TD believe that "USDJPY's risk/reward profile has tilted to the downside. Our

US rates team is fading the elevated backdrop in yields; real yields have

stalled near the taper tantrum highs and the Fed has been priced to perfection.

The FOMC minutes confirmed that the Fed is tolerant of an inflation overshoot,

suggesting unattractive risk/reward of pricing in more hikes. Against this

backdrop, and with USDJPY rekindling its romance with 10yr USTs, we expect the

pair to exhibit the first signs of USD fatigue. Trade rhetoric and geopolitical

tensions have also intensified, while the situation in Italy - though overblown

in our view - remains fluid. This is not a conducive backdrop for risk and we

expect the trade to be aided by cross/ JPY supply (most notably in EURJPY).

Technically, USDJPY looks overbought; the daily RSI is elevated and the pair has

punched through a confluence of critical supports located near 110, a move that

should signal accelerated declines. Trend line resistance from the 2015 cycle

highs located near 112 should be material."