Asian Markets Like Bernanke’ Comments

Asian markets rallied after FED Chairman Ben Bernanke voiced support for an “accommodative monetary policy.” However The Nikkei and Japanese shares under-performed as the Nikkei gained in strength.

The minutes from the Fed’s last meeting, which was released yesterday, confirmed that policy makers wanted even more reassurance that employment recovery was stronger before they begin to roll back any stimulus measures. Bernanke stated at a meeting after the minutes were released, that monetary policy would be accommodative for the time being and for the foreseeable future. This will remain so even if the Fed’s employment target of 6.5 percent is met. This stance will be very generous for markets in Asia as we saw some nice gains.

STOCKS
The market in Shanghai jumped 2.2 percent and above a key level at 2,000 for a second straight session. Investors have high hopes that the People’s Bank of China (PBOC) may show a more dovish monetary policy to spur growth as the world’s second largest economy stagnates.

The Japanese benchmark underperformed today as it lost 0.4%. This comes on the back of a strengthening yen as the currency rose 1 percent to $98.70 against the greenback. Investors were disappointed as the Bank of Japan remained firm on its economic policy as it feels the economy is recovering moderately.

Thanks to the dovish U.S. policy statements, exporter nations like South Korea and Australia also prospered today. The Kospi jumped 2.3 percent and the Australian benchmark climbed 1 percent.

European markets were quiet as they waited for the Fed statement, but should react positively today. They saw earlier losses but paired back to close largely flat as markets were held back thanks to the extremely poor trade numbers out of China.

As far as U.S. markets were concerned, they closed mainly flat with the DJIA snapping a 4 day winning streak.

CURRENCIES
Everything is about your position in the market today. Investor market reaction to the FOMC minutes gave a boost to the Euro (1.3117), see below chart, as it rose sharply. We see significant support at 1.2745. Thanks to the FOMC minutes, German 2 year note spreads were also up slightly, -0.24 percent. We see support at -0.29 percent today.

After the news, the USD/JPY declined sharply. We are at 95.57 now as we crashed through the support at 100.80. Would seem the bullish streak has ended for the yen.

COMMODITIES
Brent continues to rise on geo political tensions out of Egypt. Now at 108.20, we could test 110.00 next. As the dollar lost grown, Gold gained. The yellow metal is now at 1284.96 and is eyeing 1325.00. Silver is also strong, as it follows the yellow metal. For the first time in days, Copper gained some ground to 3.1296. Still, thanks to the state of the Chinese economy, we remain bearish on Copper.

TODAY’S OUTLOOK
Today’s calendar is fairly quiet. The U.S will report Jobless Claims as well as releasing import and export inventories. Also on tap will be natural gas inventories as well as a 30 year note auction. Will be interesting to note where yields will be following the Feds dovish comments. These numbers will help to determine the direction of the dollar in the future.