Nikkei in focus ahead of the FOMC meeting

After having been closed for a holiday yesterday, the Nikkei has returned to trade on a cautious note. 

Source: Bloomberg

We have seen a minor retreat in Japanese equities, which can mainly be attributed to a minor pullback in USD/JPY. However, the index remains in a strong uptrend and this should continue to see buyers look to take advantage of the dips. USD/JPY remains above ¥107.00 and with the greenback facing a big week, volatility is likely to ramp up particularly following the FOMC meeting.

Thursday will be a huge day for the USD and global markets. The market is expecting a hawkish tone from the Fed and should this come to fruition, then the USD could strengthen further. Should USD/JPY manage to extend its gains, then we could see strength in the Nikkei rebuild. I will continue to eye a move back to 16,000 in the near term. BoJ Governor Haruhiko Kuroda speaks twice this week and you can never rule out some volatility on the back of his speeches.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.