Wall Street is up so did the Nikkei

The USDJPY was boosted by comments from Fed Chairman Ben Bernanke at the opening of US session. (Point A of the above chart).  He said the U.S. government remains committed to ensuring major banks have the capital necessary to weather the recession and meet their obligations.

As Wall Street opened, equity showed sign of life as stock benefited from speculation that the uptick rule will be reinstated. The uptick rule – abolished in 2007 – forces shorters to sell shares at a price higher than the previous trade, and is seen by many in trading circles as vital to ending the current bear market run. The stock uptrend is further supported by Citigroup chief executive Vikram Pandit leak memo to Citi’s staff stating that the bank had been profitable in January and February, and the current quarter would be its best since 2007, when it last made a profit. 

The stock strength weighed on the dollar early in the day before losing that link shortly afternoon. USDJPY  went to the top at B that ended with a bearish hangman candle. The cross has a mild correction of 38.2% (point C) that are being supported by the 60 and 200 period ema’s. A reversal was initiated by the harami candle and pushed USDJPY  to point  D (30 min after opening of Asian session). At point D a toppish bearish harami indicated a reversal of yen downtrend. 

 Yen strengthened  on account of expected bullish Nikkei. Nikkei was bullish after booking a 26-year closing low the previous day, buoyed by higher Wall Street. Furthermore, economic data from Japan sprang a surprise in the early morning when Japan reported a better than expected core machinery orders with a fall of 3.5%. Most traders was -expecting a fall of 5.3%.The data are considered to be an indicator of capital investment by Japanese corporations and are closely watched.