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Flash: Bullish equity flows can be bearish JPY - Nomura

FXstreet.com (Barcelona) - Nomura strategists have examined the impact of equity flows on JPY.

They note that the recent equity market developments have the potential to weaken the yen and on the surface, the fresh inflows into Japanese equities look JPY positive. However, they feel that there are two dynamics at play which make the net effect of a Nikkei rally yen negative. First, they note that currency hedging by foreign investors generates yen selling both as a function of hedge rebalancing and due to adjustment of hedge ratios. Second, they see that the increasing popularity of foreign currency denominated Japanese equity investment among retail investors in Japan also generates yen selling. Together, the team feel that these two factors have the potential to dominate the effect of unhedged foreign inflows into Japanese stocks. They write, “This is almost certainly the case in the current environment where the Nikkei is significantly outperforming other global stock markets.”

Commodities Brief – Gold rally capped at 1399, precious metals shed overnight gains

Gold prices jumped yesterday, forming a major bullish engulfing candle and indicating an upside rebound. Ultimately, a retest of the minor descending trend seems imminent, as break above the trend line shall clear the way towards another test of 1478.00 resistance area. An extension higher to the 1390 level will lend strength to the recovery movement, which has thus far been few and far between over the past week. At the time of writing, the price of gold is now trading at USD $1380.08 per oz. Tuesday, after capping at the 1399 level earlier today.
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Flash: JPY led by Gov commentary - OCBC Bank

Emmanuel Ng of OCBC Bank notes that the continuing stream of comments from Japanese Economics Minister Amari may continue to buffet the yen in the near term with the minister noting that exchange rates should strike a balance between the impact on imports and exports.
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