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-----Original Message-----
From: MeLinda MeLisa <[email protected]>
Sender: [email protected]
Date: Mon, 13 Sep 2010 01:01:56 
To: StockForex<[email protected]>
Reply-To: [email protected]
Subject: [StockForex] Aussie and Japanese Yen to be Main Focus Next Week

Aussie and Japanese Yen to be Main Focus Next Week

The Australian Dollar and the Japanese Yen are likely to be the main
focus next week as both are expected to be big movers if the global
equity markets expand to the upside as expected.


Money continued to flow out of T-Bonds and Gold which may be an
indication that investors are gearing up for a stock market rally next
week

Investors should be focusing on the movement of cash at this time. The
money leaving the Treasury and Gold markets has to be put to work at
some time and the stock market seems to be the most likely place to
invest. The Australian Dollar could see more upside as traders are
likely to chase higher yielding assets. The Japanese Yen could feel
pressure from a renewal of the carry trade if equity markets begin to
soar.


The AUD USD traded higher on Friday but under yesterday’s high at
.9276 in reaction to Chinese trade data released overnight that showed
China’s trade surplus narrowed as imports accelerated in August.

We already knew that China has surpassed Japan and the U.S. to become
Australia’s trading partner, but this report could be laying the
foundation for an even sharper rise in the Aussie if the global
economy begins to heat up. At this time, the Australian Dollar seems
to be well positioned to gain from greater demand for higher risk
assets.

Technically, the AUD USD is in an uptrend after crossing the last
swing top at .9221 on Thursday. This price level is likely to become
new support since often old tops become new bottoms. In addition, an
uptrending Gann angle at .9274 on Monday is helping to guide this
currency pair higher.


The pace of the current rally may begin to slow down as this market
approaches a series of tops at .9323, .9337, .9364 and .9387. Once
this area is cleared, we could begin to see an acceleration to the
upside. The big number to overtake will be the November 2009 top at
.9405. If this price gets taken out, then look for renewed talk of the
Australian Dollar reaching par with the U.S. Dollar

The USD JPY closed up on Friday, but was still lower for the week.
Today’s action confirmed Wednesday’s closing price reversal bottom,
but all this indicates is the possibility of a short-covering rally
back to 84.62 to 84.93. What I really wanted to see was a close over
last week’s settlement at 84.28.

This morning, the Dollar/Yen regained 84.28 for a short-period of
time, trading up to 84.37 before buying dried up. This indicates that
the rally was most likely short-covering rather than fresh longs
because of the way the market drifted lower throughout the rest of the
day and into the close.

Stronger demand for higher risk assets as well as the threat of an
intervention by the Japanese government and the Bank of Japan was the
catalyst behind this week’s bottoming action.

The daily reversal bottom pattern usually lasts 2 to 3 days and ends
inside of a short-term retracement zone, but they have been known to
start even larger rallies. This is possible with the current set-up.
Money has been shifting out of Gold and T-Bonds and big investors may
be gearing up to invest these funds in the equity markets.

If this occurs, then look for a revival in the carry trade. This
occurs when investors, sensing the start of an increase in appetite
for risk, borrow in Japan, convert the Yen to Dollars and buy riskier
assets

The set-up is there, the market just needs some muscle behind it to
follow-through. This may occur next week when many large traders and
institutions are expected to return to the trading arena after the
Jewish holiday and the extended end-of-summer vacations.

Don’t be surprised by an intervention in the Japanese Yen over the
week-end. This could be the catalyst which drives up demand for risky
assets next week


Source: http://www.intermoney.org/


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