Asian stocks mostly higher after Japan elections; Nikkei down 0.11%

Most Asian stocks traded higher Monday following the results of this weekend’s Japanese elections, but stocks there and in China were among the region’s laggards. 

In Asian trading Monday, Japan’s Nikkei 225 fell 0.11% after Japanese Prime Minister Shinzo Abe’s Liberal Democratic Party scored, as expected an easy victory in the weekend’s elections that decided control of Japan’s upper house of parliament. 

Media reports said Abe’s LDP and its partner, the New Komeito party, had won at least 74 of the 121 seats up for grabs in the 242-seat upper house, according to Reuters. It marks the first time since 2007 that Japan will operate without a split parliament. Jefferies raised its year-end target on the Nikkei to 15,500, roughly 1,000 points above current levels. 

Hong Kong’s Hang Seng inched down 0.02% while the Shanghai Composite fell 0.14% after Chinese policymakers put a floor on lending rates there, but limits on mortgage rates will remain in place in an effort to cool real estate speculation. The Shanghai Composite is off 13% year-to-date, making it one of Asia’s worst-performing major indices. 

Australia's S&P/ASX 200 rose 1% after China’s central bank said on Friday that it was removing the lower limit on interest rates for banks, in an effort to help lenders attract more borrowers and spur economic activity. 

Still, China, the world’s second-largest economy, is seeing slowing economic growth and that could factor in the equation for long-term bullishness for the Aussie because China is Australia’s largest trading partner. 

New Zealand’s NZSE added 0.26% while Singapore’s Straits Times Index climbed 0.59%. 

South Korea’s Kospi jumped 0.69% even after the won and South Korean bonds gained following the end of the G-20 meeting. Like Australia and New Zealand, South Korea counts China as its largest export market. 

S&P 500 futures rose 0.10%. The benchmark U.S. index added 0.16% last Friday to close at another record high.

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Forex - USD/JPY lower despite election results

The U.S. dollar traded lower against the Japanese yen to start the week in Asia despite news that Japanese Prime Minister Shinzo Abe’s Liberal Democratic Party scored, as expected an easy victory in the weekend’s elections that decided control of Japan’s upper house of parliament. 

In Asian trading Monday, USD/JPY fell 0.46% to 100.15 after earlier trading as low as 99.62. The pair is likely to find support at 99.45, Thursday’s low and resistance at 101.52, the high of July 8. 

USD/JPY rose 0.18% last Friday and 0.66% for the week. While victory for Abe’s LDP was thought to be a potential boon for yen bears, it was also widely expected, indicating that markets may have efficiently priced in the result in the days leading up the election. 

Gaining control of the upper house of parliament could allow Abe to continue to push through a series of structural reforms aimed at spurring economic growth and fighting deflation. 

Media reports said Abe’s LDP and its partner, the New Komeito party, had won at least 74 of the 121 seats up for grabs in the 242-seat upper house, according to Reuters. It marks the first time since 2007 that Japan will operate without a split parliament. 

There are concerns that now with control of both houses of parliament that Abe will turn his attention to the more conservative side of his agenda, which includes possibly increasing Japan’s military capabilities, but many market participants believe it is unlikely the prime minister will suddenly shift course from making the economy his top priority. 

Japanese stocks appeared to like news of the LDP gaining control of the upper house. The Nikkei 225 was up 0.71% at this writing. 

Elsewhere, EUR/JPY fell 0.42% to 131.66 while AUD/JPY dropped 0.18% to 92.18.

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Japanese Elections: LDP and partner set to win a simple majority

Exit polls for the elections for Japan’s upper house show that LDP and coalition partner New Komeito won a majority in the upper house. The LDP did not win a majority on its own according exit polls. Official results are due later on. USD/JPY could gap higher when markets open, even though the results was expected.

LDP is projected to have 113 to 118 seats in the upper house after the elections. Together with New Komeito, the government is expected to secure 130 out of 242 seats. In addition, the parties that are in favor of a constitutional change have not secured a two thirds majority (162 seats) needed for a change in constitution.

If the exit polls are confirmed, this is good news for yen bears: Abe has a mandate for pushing through economic reforms, but he doesn’t have the power to push through a constitutional change, such as allowing Japan to have a more serious military, something that would take a toll on the economy.

The LDP party led by Prime Minister Shinzo Abe was expected to win the elections, gaining a majority also in the upper house of parliament. They took over the country in elections for the lower house held back in December. They enjoyed a landslide victory back then.

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Forex - GBP/USD weekly outlook: July 22 - 26

The pound rose to two-week highs against the dollar in subdued trade on Friday but gains were limited as expectations that the Federal Reserve will start to unwind its bond buying later this year remained intact.

GBP/USD hit highs of 1.5281, the highest since July 4, before settling at 1.5268, 0.29% higher for the day and extending the week’s gains to 1.15%.

Cable is likely to find support at 1.5156, Thursday’s low and resistance at 1.5345, the high of June 27.

Demand for the dollar continued to be underpinned after Federal Reserve Chairman Ben Bernanke indicated Wednesday that the bank still expects to start tapering its asset purchase program by the end of the year.

In the first day of his semi-annual testimony to Congress Bernanke said the central bank could scale back its asset purchases by the end of the year if the economy continues to improve, but added that there was no “preset course.”

Bernanke said the economic recovery was continuing at a moderate pace but reiterated that monetary policy will remain accommodative for the foreseeable future.

Earlier Wednesday, the minutes of the Bank of England’s July meeting showed that policymakers voted unanimously to keep the bank’s quantitative easing program unchanged, ahead of a decision next month on whether to provide forward guidance on future interest rates.

Two policymakers who had previously voted in favor of more stimulus said it remained "warranted".

Meanwhile, official data showed that the number of people claiming unemployment benefits in the U.K. fell by a seasonally adjusted 21,200 in June, better than expectations for a decline of 8,000. 

The U.K. unemployment rate held steady at 7.8% in May.

In the week ahead, the U.S. is to publish data on the housing sector and manufacturing. The U.K. is to release what will be closely watched data on second quarter economic growth.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, July 22

The U.S. is to publish private sector data on existing home sales, an important economic indicator.

Tuesday, July 23

The U.K. is to release a report on mortgage approvals, an important indicator of demand in the housing sector.

Wednesday, July 24

The U.K. is to print private sector data on industrial order expectations, an important economic indicator.

Later Wednesday, the U.S. is to release official data on new home sales, a leading indicator of economic health.

Thursday, July 25

The U.K. is to publish preliminary data on second quarter gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.

The U.S. is to publish government data on durable goods orders, a leading indicator of production, as well as the weekly government report on initial jobless claims.

Friday, July 26

The U.S. is to round up the week with revised data on consumer sentiment from the University of Michigan.

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EUR/USD Forecast July 22-26

Eur/Usd remained stable, ignoring some euro-zone issues and enjoying some dollar weakness. Flash Manufacturing and Services PMIs and German Ifo Business Climate are the main events on our calendar. Here is an outlook on the important events to watch and an updated technical analysis for EUR/USD.

German ZEW dropped 2.2 points to 36.3, missing economists’ expectations. Weak German industrial production and foreign trade contributed to this fall. Furthermore, trouble from the east threaten to jeopardize Germany’s economic recovery; The slowdown in China, can hinder Germany’s growth prospects for the coming months. In addition, jobs figures were positive but housing was weak. The taper question remains open after Bernanke didn’t say anything new. What is the next move for the pair? Let’s start

EUR/USD daily chart with support and resistance lines on it. Click to enlarge: 

1. Consumer Confidence: Tuesday, 14:00. Euro-zone consumer sentiment edged up more than expected in June, advancing to minus 18.8 from minus 21.9 in May, the highest rise in 22 months. Despite the negative reading, this rise is another good sign that eh European economy is headed towards recovery. Another rise to -18 is expected this time.
2. Flash Manufacturing and services PMIs: Wednesday. PMI data released last month indicates theslowdown in the euro zone economy eased in light of a 15-month-high increase in the EU manufacturing activity, rising to 48.7 from 48.3 in May. The Eurozone services sector also improved to 48.6 from 47.2 in May. German manufacturing sector declined unexpectedly to 48.7 from 49.4 in May but showed expansion in the services sector reaching 51.3.  Even French factory output was better than projected with a 48.3 reading in manufacturing output compared to 46.4 in May and a rise to 46.5 in services from44.3 in the previous month. All in all, slower declines were registered across the manufacturing and services sectors. Economists see further improvement among the EU members this time: French Manufacturing-48.9, French Services-47.7, German Manufacturing-49.3, German Services-50.9, Euro-zone Manufacturing-49.4, Euro-zone-Services-48.9.
3.  Italian Retail Sales: Wednesday, 8:00. Retail sales in Italy declined 0.1% in April, following a 0.3% fall in April, a bit worse than the flat reading predicted by analysts. This was the eighth consecutive decline in purchases leading to a 2.9 % annual reduction, indicating the near-term prospects in retail sales continue to look pretty grim. A rise of 0.4% is forecast now.
4. Spanish Unemployment Rate: Thursday, 7:00. The Euro-zone debt crisis continues to burden Spanish economy and labor market. The number of unemployed increased to 27.2% crossing the 6 million barrier in the first quarter, following 26.0% in the fourth quarter of 2012. No change is expected now. Recently, Spain reported a big drop in jobless claims, but this was mostly a “summer effect“.
5. German Ifo Business Climate: Thursday, 8:00. German Business Confidence recovered ground for the second month in June rising to 105.9 from 105.7 in May, due to positive economic data registered in the last weeks. The rise was broadly in line with expectations. The Bundesbank said economic growth will accelerate in the second quarter. However a slowdown in China may hinder recovery. A further rise to 106.3 is anticipated.
6. M3 Money Supply: Thursday, 8:00. The euro zone’s M3 money supply increased in line with expectations in May, rising 2.9% following a 3.2% gain in the previous month. Loans to private sector fell 1.1% annually last month, compared to expectations for a 0.9% drop, after falling 0.9% in April. An increase of 3.0% is forecasted now.
7. Belgium NBB Business Climate: Thursday, 13:00. Belgian business confidence declined unexpectedly in June, reaching -12.8 from -12.4 in May as business leaders became more pessimistic about financial prospects in the coming months. Belgium, the euro zone’s sixth-biggest economy, marked a fourth consecutive quarter of contraction. However business leaders in the volatile trade sector, were less negative about employment and demand expectations, allowing sentiment to edge up after four months of decline.  A rise to -11.2 is predicted this time.

*All times are GMT

EUR/USD Technical Analysis

Euro/dollar began the week by trading in the 1.30 to 1.31 range (discussed last week). It then made a move higher and peaked just under 1.3175. The pair remained in a higher range towards the end of the week, but the moves were quite limited.

Technical lines from top to bottom:

The round line of 1.34 served in both directions when the pair traded in higher ground. The pair temporarily breached this line in June.  1.3350 provided support when the pair traded higher in February and now serves as a pivotal line.

1.3255 provided support during January 2013 and also beforehand. A recovery attempt failed to reconquer this line at first, but now this line is strong support. 1.3250 capped the pair back in May and is now somewhat less reachable.

1.3175 capped the pair during July 2013 and works as another line of defense for any upwards moves .1.3100 is worked as temporary resistance in December 2012 and is becoming more important once again, after capping a recovery attempt in June and then in July.

It is followed by 1.3050, which proved be strong support in May 2013, defending the round number in more than one occasion, but it is less significant now. The very round 1.30 line was a tough line of resistance. In addition to being a round number, it also served as strong support and recently worked as a pivot line.

1.2940 is the next line of support. It worked as such during April and May 2013. Lower, 1.2890 worked in both directions during 2012 and was the beginning of the uptrend support line. It is becoming more important, as a clear separator of ranges.

1.2840 worked as a cushion for the pair during May 2013. Lower, the round number of 1.28 was the bottom of a long term wide range in 2012 and its breach in May 2013 was not confirmed.

Below, 1.2750 worked as a separator of ranges during November, and stopped the pair’s drop in March. This is a key line on the downside, as clearly shown in the first week of April and then in July. This is followed by the round number of 1.27, which is a minor line.

1.2660 follows closely. This was the low in November 2012 and where the second uptrend support begins. The last line for now is 1.26, which capped the pair back in early September.

False break of long term uptrend support

EUR/USD made a significant dive below downtrend support, but this lasted only a few hours. From there (and from 1.2750) the pair shot higher. This line is still worth noting.

I am bearish on EUR/USD

After “injecting a downwards bias”, the ECB didn’t wait too much and also announced looser collateral rules. This activity shows that the ECB is worried, and it has good reasons. Greece could be suffering from a funding gap as the troika might not not last too long. Portugal hasn’t resolved its crisis and pressure is mounting on the Spanish PM to resign due to allegations of receiving illegal funds. Even the locomotive, Germany, can really ride on without European or Chinese demand.

In the US, growth remains, even if slower than expected. And, as long as jobs data is OK, the taper caper is in place, and set to support the dollar.

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USD/JPY Outlook July 22-26

The Japanese yen was slightly down against the US dollar, as USD/JPY broke above the 100 level, ending the week at 100.64. The upcoming week is very quiet, with only four events on the schedule. Here’s an outlook for the Japanese events and an updated technical analysis for USD/JPY.

US Federal Reserve chair Bernard Bernanke testified before Congress last week, but there were no fireworks or drama, and the currency markets did not show much reaction. The US did release some strong employment and manufacturing numbers late in the week, and this gave a slight boost to the US dollar.

USD/JPY daily chart with support and resistance lines on it. Click to enlarge: 

1. Upper House Elections: Sunday, All Day. Japanese voters go to the polls on Sunday for elections to Upper House in parliament. Half of the 242 seats are being contested, and Prime Minister Shinzo Abe’s LDP party is favored to win a majority. An electoral win would give the LDP control of both houses of parliament, and would make it easier for Abe to continue his aggressive economic agenda, popularly referred to as “Abenomics”.
2. Trade Balance: Tuesday, 23:50. Japan has not posted a monthly trade surplus in over two years, and the markets would be pleased just to see a narrowing of the deficit. The June release came in at -0.82 trillion yen, lower than the estimate of -0.89 trillion. The markets are expecting an improvement in the upcoming release, with an estimate of -0.58 trillion yen.
3. CSPI: Wednesday, 23:50. This corporate inflation indicator climbed to 0.3%, its highest reading this year. This beat the market estimate of 0.1%. The markets have raised the bar, and are anticipating a very strong reading of a 0.7% gain. Will the indicator be able to meet or beat this rosy prediction?
4. Tokyo Core CPI: Thursday, 23:30. After years of readings in negative territory, this important inflation indicator has posted two straight readings above zero. The previous release came in at 0.2%, matching the forecast. The July estimate stands at 0.3%. Another gain would point to more inflation in the economy and would be bullish for the yen.

*All times are GMT.

USD/JPY Technical Analysis

USD/JPY started the week just below the 100 level, at 99.95. The pair dropped to a low of 98.89, testing support at 98.90 (discussed last week). but then bounced back strongly, crossing the 100 line and climbing to a high of 100.86. USD/JPY closed the week at 100.64.

Live chart of USD/JPY:

Technical lines from top to bottom

105.50 is above the round number of 105 and worked as resistance during 2008. It reverted to support later in the year, and is back providing strong resistance. Below, 104.60 slowed the pair’s rise in early 2008.

103.50 provided support for the pair in July and September 2008 before reverting to a resistance line in October 2008. The line has been quiet since then but was briefly breached in mid-May of this year. Next, 102.80 capped the pair in May 2013.

101.44, which was the post-crisis high seen in April 2009, started the week as very weak resistance, but is stronger with the yen rising sharply and trading near the 99 line. 100.85 was briefly breached late in the week, but remains in place as the pair retracted slightly. It is providing weak resistance and could see action early in the week.

The significant 100 level continues to be active, and has reverted to a weak support role. It could face pressure if the yen shows any improvement.

USD/JPY continues to receive support at 98.90. This line held steady as the yen pushed higher early in the week.

97.80 was quite busy in June, and continues in a support role. It has strengthened with the pair trading over 100.

The March 2013 peak of 96.71 is providing support. This is followed by the round number of 95, which was last tested in mid-June.

The final line for now is 93.79. This marked the low point of a rally by the dollar which started in mid-June and saw the pair climb to the mid-101 range earlier this month.

I am neutral on USD/JPY

The Japanese economy is showing signs of improvement, and the BOJ expressed cautious optimism in its recent policy meeting. If this week’s inflation releases continue to point upward, this could improve market sentiment and bolster the yen. Over in the US, the hot issue of QE tapering remains unresolved after Bernanke’s uneventful testimony before Congress. Overshadowed by Bernanke were some strong US releases, and if US data looks solid this week, the dollar could gain strength.

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Forex Trading Signal for 22th July 2013

                                                                                


Japan (Tokyo)                               United Kingdon (London)                        USA (New York)

For more easy access,,,,,,Download our mobile application on your mobile :   Click Fxsignals 

EUR/USD

 UP Trend :

 (1) BUY

E/P: 1.31301

T/P: 1.31700

S/L: 1.30900

GBP/USD

UP Trend:

(1) BUY

E/P: 1.52511

T/P: 1.52900

S/L: 1.52000

NOTE: The above posted Signals are delayed 2 - 4 hours after it has been  generated.
Daily forex signals are sent ontime to only our subcribers.

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Forex Trading Signal for 19th July 2013

                                                                                


Japan (Tokyo)                               United Kingdon (London)                        USA (New York)

For more easy access,,,,,,Download our mobile application on your mobile :   Click Fxsignals 

EUR/USD

 UP Trend :

 (1) BUY

E/P: 1.31054

T/P: 1.31400

S/L: 1.30600

GBP/USD

UP Trend:

(1) BUY

E/P: 1.52127

T/P: 1.52500

S/L: 1.51600

NOTE: The above posted Signals are delayed 2 - 4 hours after it has been  generated.
Daily forex signals are sent ontime to only our subcribers.

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