Asia Stocks Mixed As Yen Declines; Nikkei Jumps 1.40%

Forex Pros – Asian stocks were mixed on Wednesday, as shares in the financial sector led markets higher, while Japanese exporters gained as the yen weakened against the U.S. dollar.

During late Asian trade, Hong Kong's Hang Seng Index was down 0.48%, South Korea's Kospi Composite gained 1.05%, while Japan's Nikkei 225 Index jumped 1.40%.

In Japan, shares in the financial sector led gains following a report that said most major Asian banks will be exempt from stricter global banking regulations.

Shares in Japan's largest lender Mitsubishi UFJ Financial Group surged 4.24%, Japan's third-largest lender Mizuho Financial Group soared 7.63%, while Sumitomo Mitsui Financial Group saw shares jump 5.86%.

Elsewhere, shares in many of the big name Japanese exporters gained as the yen weakened against the U.S. dollar.

Electronics giant Sony saw shares jump 1.25%, shares in the world's largest camera maker Canon soared 3.10%, while shares in automaker Toyota leaped 2.31%.

Meanwhile, in Hong Kong, property developers led declines amid concerns that China may introduce monetary policy tightening measures intended to cool property inflation. Shares in Sino Land Company tumbled 2.55%, Sun Hung Kai Properties saw shares fall 1.75%, while shares in Hang Lung Properties plunged 2.13%.

The outlook for European equity markets, meanwhile, was upbeat. The EURO STOXX 50 futures pointed to a gain of 0.14%, France's CAC 40 futures indicated an increase of 0.15%, the FTSE 100 futures pointed to a gain of 0.08% and Germany's DAX futures were up 0.17%.

Later in the day, the U.S. was to release its weekly report on initial jobless claims. The data was being released one day earlier than usual as Thursday was to be a national holiday.

USD/CHF, EUR/USD, GBP/USD: Is The US Dollar Just Making Noise?

We have already started seeing some strength in the USD especially against the Euro. Towards the end of the US session, the US Dollar started to rally across the board. Aside from the slide by the EUR to USD, we also see declines in the AUD/USD and GBP/USD. We are also witnessing rallies in the USD/JPY, USD/CAD, and USD/CHF.

Is this just noise?

AUD/USD, GBP/USD, EUR/USD

• AUD/USD has pushed to record highs this November. A decline in the latter part of the US session established topping act 1.02 area. The market broke below the short-term range.
• That's one bearish signal pushing against many bullish confirmations, so I would like to see a pullback fail to break above 1.01 before considering a bearish outlook, which sould still be in the short-term to 0.9850 area. A break below 0.98 suggests we could test the 0.94 area. For now though, the market still has the bullish momentum, so today's move could be just noise unless we get further confirmation.
• GBP/USD was in a bullish breakout but is in a throwback. If the market can break below 1.59 though, it can correct further down to 1.5650.
• The GBP/USD is weaker than the AUD/USD as you see it crossing the 50-period simple moving average (50SMA). The AUD/USD still remains above.
• The EUR/USD is the weakest of these three, as it has crossed both the 50 and 200 SMAs. The RSI reading also progressively becomes more bearish from AUD/USD to GBP/USD to EUR/USD.
• If the Euro sustains a break below 1.37, it may extend towards the 1.3350 area.

USD/CAD, USD/JPY, USD/CHF

• USD/CHF is the weakest of these three, but looks like it is reaching towards 0.98. A break above that suggests parity (1.00). Without the break, today's move is just noise with possibly some further follow-through to 0.98. If you are still bearish on the greenback, I would look for topping earlier like 0.9750.
• USD/CAD could not break the previous low near 0.9980. However, is hasn't shown any strength yet. Today's price action brought the pair to the SMA, but it has not even reached 38.2% retracement. There is a chance even if this is noise to reach 1.0160 (50% retracement). A break above that would be an initial signal for USD-recovery.
• USD/JPY is strengthening. Remember we mentioned the Japanese Yen becoming more vulnerable across the charts. However, the USD/JPY is still bearish until it breaks above 0.82.85/0.83 area. The is an important pivot, and today's price action may be reflect of the market attempting to test this 83.00 pivot.
• Consider this noise until a clear break above it.

USD Dollar Index

• Turning our attention to the USD Index, we see that we have had two strong days, creating a bullish divergence.  I will look for a some short-term correction, but I would not expect it to rally above 80.00. If it DOES however, today's move is the beginning. If you think there is a USD recovery, the dollar-crosses charts show you that EUR/USD, and USD/JPY may be good candidates for big moves. If you think the USD is still bearish, the AUD/USD and USD/CHF may be the best candidates to see big moves.

Do  you think the USD is making a recovery?  Do you agree with the candidates for each scenario based on the RSI? We would love to hear from you.