Greenback Remains Broadly Strong, Equities’ Gains Attracts Focus and Funds - 13.5.2013

The Japanese Yen sell off continued early in the morning on Monday after breaching on Thursday major resistance at 100. In addition as equities advance investors move their funds to stocks for potentially greater returns. The USDJPY rose as high as 102.12 on Monday approaching 161.8% Fibonacci extension of 99.88 to 95.80, at 102.51. US S&P 500 on Friday made a new close high at 1633.70, advancing by 0.43%, Dow Jones also finished at a record close high at 15118.49 and at the same time the benchmark US 10-Year Bond Yield climbed the previous week from 1.65% to 1.90% suggesting that traders seek greater returns in stock markets.

The US dollar remained broadly stronger against its major peers on Friday surging to cap at 83.39 and today is fluctuating between 83.39/83.06 recently created range. The Euro versus the US dollar finally sank below 1.30 establishing a downward structure in the near-term, limited for the time being by support at 1.2937. The sterling against the greenback entered in a bearish development the previous week falling from cap at 1.5589 to a lately formed floor at 1.5313, also the AUDUSD dropped below parity, as low as 0.9964 following previous week rate cut as well as due to powerful US dollar pushed the pair lower. Furthermore the Gold quoted in US dollars also dropped in the last 3 trading session after finding resistance at the 61.8% Fibonacci level of the sharp decline from 1590 to 1322, at 1486 and reduced to 1422 amid equities became more attractive.

Lastly, Chinese data on Fixed Asset Investment, Retail Sales and Industrial Production were just missed with Hang Seng losing by 1.16%, Shanghai Composite falling slightly by 0.22% but NIKKEI 225 was up by 1.22% as weaker yen provides more potential for export related industries.