The Nikkei Soars 370 Points

Asian markets are soaring higher today, and especially the Nikkei as comments by Janet Yellen, Vice Chair of the Federal Reserve and hopeful replacement for Ben Bernanke issues very supportive remarks of the current stimulus program. Overnight, the DJIA and the S&P 500 also hit fresh record highs.

Ahead of her testimony before Congress, which begins today, Yellen released a statement. The statement reiterated that the Fed must do more to support the economic recovery. Then it can go back to a “more normal approach.” This means more QE and closely follows in the footsteps of Ben Bernanke who is stepping down soon.

STOCKS
Today, the Nikkei has soared to a new three week high, jumping nearly 359 points, as the country’s GDP grew at 1.9 percent in the Q3, beating the expected 1.7 percent. The USD/JPY also rose and is close to a two month high at 99.80. The currency pair is at 99.672 at the time of this report.

Overnight the DJIA traded lower at first, down 78 points, then hit a new intraday record at 15,822.98. The Dow Jones eventually closed up 70.96 points to finish at 15,821.63. The S&P 500 added 14.30 points to close at 1,782. It is above its record high set on Oct. 29 as well as its intraday record set the next day. The Nasdaq Composite continued its trek towards 4,000 as it closed up 1.2 percent to finish trading at 3,965.58.

Elsewhere in Asia this morning, the Shanghai Composite is up 0.4 percent as it reversed previous losses. At one point the market was at its lowest level since September 2. Investors are worried about another credit crunch after the People’s Bank of China (PBOC) drained funds from money markets. This is the second week in a row the PBOC has done this. In Australia, the ASX 200 is up 33 points as it is recovering from Wednesday’s four week low. In Seoul,, the Kospi is also recovering from yesterday’s two month low and is up 0.8 percent.

CURRENCIES
EUR/USD (1.3467) hit an intraday high at 1.35 before moving a bit lower. This market remains bullish above 1.3450 and targets 1.35 then 1.3520. We turn bearish back below 1.3395. The USD/JPY (99.664) is close to breaking out of 99.80. If that happens we target 100 then 100.60. A move above this can see this market trekking towards 104.00.

The GBP/USD (1.6031) bounced up nicely form 1.58850 and is trading near its intraday high. We need to break back above 1.60 to bring back the bulls or we run a risk of another dip. AUD/USD (0.9348) remains weak as the recovery from the support near 0.92800 failed at 0.9380. We need to break above 0.9480 to target 0.95 and higher.

COMMODITIES

Nice little recovery in the metals this morning.

Gold (1285.70) is recovering from its steep loss yesterday and back above 1275. While above this level, we can target 1300. Silver (20.80) was also up bit remains below 21. While below 21, we can still dip towards 19.50. Copper (3.178) is also higher but remains below 3.20. While below that resistance level we are vulnerable to dip towards 3.15.

TODAY’S OUTLOOK

Today is another weak day for data. Yellen begins her confirmation hearings before Congress today and we will get a statement from Federal Reserve President Plosser. As far as data, the U.S. will release oil inventories and jobless claims today.