Forex Today: Japanese Stocks Soar

Strong fundamental data, record profits and investor sentiment are pushing the Japanese stock market strongly higher to reach new multi-decade highs.

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1. Japanese stocks are rising strongly, with bulls firmly in control. The TOPIX has reached a new 30-year high, while the Nikkei 225 Index will close at a new 18-month high. The Japanese stock market is currently outperforming most other stock markets. The bullishness is due to strong fundamental data (including GDP which just increased beyond expectations to grow by 0.4% quarter-on-quarter), Japanese companies and banks booking record profits, and a bullish sentiment reinforced by bullish momentum. Trend traders might find being long of the Japanese stock market attractive right now.
2. The Federal Reserve’s Goolsby’s stated that he has not decided which way to vote at the June meeting on a possible rate hike, expressing uncertainty as to whether the Fed’s recent tightening has sufficiently restrained the economy.
3. In the Forex market, the US Dollar has risen over the past day. Action has been dominated so far today by weakness in the Japanese Yen and strength in the New Zealand Dollar. The long-term bearish trend in the US Dollar remains valid although the strength of the current retracement suggests it is likely to persist for a while. Nevertheless, trend traders may still be looking for long trades in the EUR/USD and GBP/USD currency pairs.
4. The slow bullish trend in Gold remains technically valid despite the fact it closed yesterday below the very big round number at $2,000, following its decline from its high near the all-time record price of $2,070 reached two weeks ago week. A daily close below $1,975 would be a bearish sign, while a close below the support level at $1,917 would be even more bearish.
5. Some soft commodities have been breaking to new highs and trending strongly, notably the Sugar ETF Cane, and the Cocoa ETF NIB, which both reached multi-year high prices last week.
6. Yesterday’s release of US Retail Sales data came in lower than expected, suggesting a cooling US economy.
7. Yesterday’s release of Canadian CPI (inflation) data saw inflation higher than expected over the past month, with a month-on-month increase of 0.7% when only 0.5% had been expected. However, Core CPI fellm so the overall result was mixed.
8. Yesterday’s release of UK Claimant Count Change (unemployment claims) data
9. Yesterday’s release of Australian Wage Price Index data came in very slightly below expectations.