Orders Were Not Issued
The Bank of Japan is denying it issued orders to intervene in currency
markets to weaken the yen. The yen fell yesterday after news wires reported
the BOJ intervened, allegedly with the intention of keeping the value of the
yen down in order to keep exports cheaper and stimulate Japan’s
economy.Â
The yen had already moved to the top of a six-month range in the
aftermath of the 9/11 terrorist attack prior to today,
as traders sought a safe-haven from vulnerable dollars. The yen has also
been on the rise because monies were being repatriated from abroad to close
out the fiscal year, which draws to a close in September. The yen has risen
in four of the past five years in September due to the
end-of-the-fiscal-year effect, but the move has been exaggerated this year
due to new rules requiring firms to mark-to-market financial losses, forcing
firms with losses to bring home even more yen to meet the new accounting
standards.Â
The yen gapped to a seven-month high, triggering a
Pullback From Highs
setup and continuing to a gain of over 100 ticks so far.
Despite the rally in the yen, December dollar index futures
(
DXZ1 |
Quote |
Chart |
News |
PowerRating) are holding their own after the European Central Bank (ECB) said
recent events in the US would negatively impact both economic growth and
inflation on the continent. This opens the door for another ECB rate cut.
The ECB followed the Federal Reserve in cutting interest rates .50%
Monday, the first day the stock market re-opened following the attack.
Perceptions of a slowing economy and lower interest rates are negative for
euro FX futures
(
ECZ1 |
Quote |
Chart |
News |
PowerRating) and Swiss francs
(
SFZ1 |
Quote |
Chart |
News |
PowerRating), both
down slightly from multi-month highs. Euro FX, Swiss francs and the
British pound
(
BPZ1 |
Quote |
Chart |
News |
PowerRating) are on the Momentum-5
List, so today’s setback will likely present a Pullback From High buying
opportunity in coming days.
In stock index futures, the leading contract from the
Implosion-5 List is leading to the downside. Dow futures are still being
dominated by the downside expansion “shock” bar that occurred on
Monday when stocks re-opened for the first time since the attacks and the
Dow suffered its worst point loss ever. Both
Dow futures
(
DJZ1 |
Quote |
Chart |
News |
PowerRating) and the S&P 500 futures
(
SPZ1 |
Quote |
Chart |
News |
PowerRating) are making good on Off
The Blocks
short entries.Â
Â
With so many markets falling due to the perception that a declining economy
will sap demand for commodities, not all of the contracts that could be on
the
Implosion-5 List fit on the list. But we have an unusually high number of
contracts on the
New 10-Day Low List, attesting to the perception of waning commodity demand.
Notably, energies hit new 10-day lows yesterday. Off
The Blocks
short entries are working out in
October crude oil
(
CLV1 |
Quote |
Chart |
News |
PowerRating)
and
unleaded gasoline
(
HUV1 |
Quote |
Chart |
News |
PowerRating) and importantly, did not
trigger a short sale in heating oil
(
HOV1 |
Quote |
Chart |
News |
PowerRating), which is up
slightly.Â
November soybeans
(
SX1 |
Quote |
Chart |
News |
PowerRating)Â dipped below well-defined support to
provide a
Turtle Soup Plus One Buy opportunity. The contract’s response has been
muted, however, with beans up just 1 1/2 at 471.