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Nikkei Rises as the Yen Slips

By:
David Frank
Published: Oct 21, 2016, 05:43 UTC

This morning, financial stock markets in the Asian and Pacific Rim were mostly lower as they tracked Wall Street which had a down day overnight. The

Nikkei Rises as the Yen Slips

This morning, financial stock markets in the Asian and Pacific Rim were mostly lower as they tracked Wall Street which had a down day overnight. The Japanese Nikkei 225 bucked the trend to move higher thanks to a weaker yen.

In Australia, the S&P ASX 200 was down 0.5 percent by mid-morning with most sub-sectors seeing red. The energy sector was down over one percent and the heavily weighted financial sub-sector was down 0.8 percent. In New Zealand, the NZX 50 was down 0.2 percent and in South Korea, stocks were down 0.25 percent on the day.

In Japan, shares bucked the downtrend. The headline Nikkei 225 was up 0.15 percent as shares of Fast Retailing rose 0.80 percent. This company is very heavily weighted on the exchange. In Hong Kong, the markets were delayed by a typhoon opening.

Looking at the currency markets, the US Dollar index, an index that measures the Buck against a basket of currencies was up to 93.38. It had been at 97.80 earlier this week. The US Dollar is getting a boost from expectations that the US Federal Reserve will raise interest rates come December.

The US Dollar is also getting a boost from a relatively weak euro which is now trading below $1.095. This is down from last week’s $1.10 area. The European Central Bank left monetary policy and interest rates the same. They did not give any hints, clues or talk regarding whether or not they would be extending their current quantitative easing (QE) program beyond March 2017. All ECB President Mario Draghi said was “all things end.” As of 9:00 am HK time, the EUR/USD was trading at $1.0916.

The US elections are also in play, concerning the almighty Buck and would continue to add volatility until after voters vote on November 8. There are polls that indicate that a democratic win, or Hillary Clinton as president, would be positive for the greenback. She is widening her margin in the recent election polls. Including those in battleground states and those who traditionally vote Republican.

Looking at other currencies, the Japanese yen fell this morning to $104.14 against the US Dollar. This is up from levels below $103.50 in the previous session in the USD/JPY Forex pair. Turning to the Australian Dollar, the AUD/USD Forex market was trading near $0.7633 after slipping from near $0.77 yesterday. This comes after a poorer-than-expected employment report sharply missed analyst expectations increasing the probability of the Australian central bank of cutting interest rates again.

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