MUFG Research discusses USD/JPY tactical outlook and adopts a neutral bias, expecting the 109 level to cap further upside in the near-term.

"Retail sales data due out on the 16th will be important to watch, given the sudden slump in the non-manufacturing ISM index and weak wage growth. Retail sales undershooting market expectations could push down on USD/JPY temporarily. But widening USD/JPY basis shows that demand for the USD will be strong through year’s end. Outward investing unhedged for currency risk is likely to continue, so JPY selling by Japanese will likely support a lower bound for USD/JPY," MUFG adds.