Nikkei Stages Rally As Yen Weakens
Japan’s Nikkei finished unchanged yesterday, but it is making up for lost ground today, trading near its session high with a gain of 0.84% heading into the lunch hour.
Japanese investors are reacting to the overnight strength on Wall Street combined with a much weaker Yen versus the U.S. dollar yesterday.
The morning’s gain has seen the Nikkei retake the 18,000 level, with major Japanese export companies leading the charge higher.
The USD/JPY traded at the 110.00 level overnight and has continued to rally in the Asian morning session, nearing the 111.00 level as the lunch hour approaches. Resistance for the pair expected to be at the 111.50 level, but the rally has been incredibly strong.
The currency pair gained overnight after U.S. Federal Reserve Chairwoman Janet Yellen spoke to Congress and confirmed that the Fed is very likely to raise interest rates when they meet next month. With the chance of a rate hike now at 90.6% as measured by the CME Fed Funds Futures, we could easily see the Yen become significantly weaker versus the USD in coming weeks.