The Nikkei Falls On A Stronger Yen

Asian markets traded rather mixed today as investors are cautious ahead of key testimony being given by Federal Reserve Chief Ben Bernanke today. Asian investors followed cues received from the U.S. markets which we rather weak as the U.S. markets ended winning streaks.

Traders will be cautious today as they wait in Bernanke’s semi-annual testimony to the U.S. Congress later today. They will be looking for any signs or clues as to when the Fed will begin to roll back its QE2 program. Yesterday, Kansas City Fed President Esther George made comments that the bank should begin reducing the monetary stimulus program now and close it by “sometime in the first half next year”

STOCKS
The Nikkei lost 0.6 percent on the back of a stronger yen. The USD/YEN fell below 100 level today. Also, investors were disappointed as they saw no hints of any future stimulus from the Bank of Japan’s latest policy meeting. The Australian S&P/ASX was unchanged and the Korean Kospi led leaders today as it finished up 0.8 percent. The Shanghai Composite was unchanged around 2060 points today as trading was extremely choppy on light volume.

European markets closed lower yesterday on weak economic data out of Germany. U.K. inflation also missed forecasts which sent the FTSE 0.3 percent lower. Germany’s widely anticipated ZEW Index fell to 36.3 in July. This is way below the 38.5 print in June.

U.S. markets closed lower last night as the S&P 500 broke and 8 day winning streak. Investors did not digest a batch of Fed statements with some weak economic reports very well. The DJIA lost just over 32 points and the NASDAQ lost just about 9 points on the day.

CURRENCIES
The Yen strengthened today as the USD/JPY was lower, see below chart, and now at 99.39. We do see strong support at 99.00. Should the yen continue to strengthen, then we could test 98.30 The EUR/USD was bullish yesterday to test 1.3300 and is now at 1.3140.

The AUD/USD, surprisingly, is above 0.9200. We might see short covering now and test the resistance at 0.9310.

COMMODITIES
Copper has been strengthening. Now trading at 3.1825 and could test 3.25 with a break higher targeting 3.30. Gold is also bullish at 1290, but has strong resistance at 1300. WTI Brent Crude has fallen sharply over the last few days. We are currently at 107.87 but can still test the key level at 110.00.