Nikkei set to dip; further yen weakness unlikely post-BOJ

Tue Jan 22, 2013 6:41pm EST

TOKYO, Jan 23 (Reuters) - Japan's Nikkei share average is
set to edge lower on Wednesday as the yen is not expected to
weaken further in the near-term after the Bank of Japan's latest
aggressive easing fell short of some expectations for immediate
action.
    But the decision to commit to open-ended asset buying next
year and double its inflation target to 2 percent will support
the Nikkei, keeping it around its highest levels in nearly three
years.     
    "The latest decision by the BOJ will likely serve as a
support to the market so a fall should be limited," said Yutaka
Miura, a senior technical analyst at Mizuho Securities.
    "But investors may not chase the market too much higher as
they come to the realisation that the central bank has decided
to do the minimum level."     
    Market players said the Nikkei was likely to trade
between 10,550 to 10,700 on Wednesday, after ending down 0.4
percent at 10,709.93 on Tuesday. It retreated for a second day
in a row from Friday's nearly three-year closing high of
10,913.30.
    Nikkei futures in Chicago closed at 10,650, down
from the close in Osaka of 10,700.
    On Wednesday morning, the dollar was down 0.9 percent
against the yen at 88.79. The dollar had risen to 90.06
yen immediately after the BOJ decision, not far from its
2-1/2-year high of 90.25 yen, but later retreated. 
    Prime Minister Shinzo Abe's calls for bold BOJ easing,
dating back to mid-November when he was the leading candidate to
win a general election, have helped to weaken the yen, in turn
boosting exporters and sparking a 24 percent rally in the
Nikkei.
    While some technical charts show that the stock market is
'overbought,' the toraku ratio, or up-down ratio, used for the
first section of the Tokyo Stock Exchange, was at 142. The ratio
is calculated by dividing the 25-day moving average of stocks
that gained by the 25-day average of those that fell. A level
above 120 signals an overheated market.
    Analysts also said that investors' focus has shifted to
quarterly earnings announcements over the next few weeks, with
recent gains in exporters such as autos and technology not yet
backed up sufficiently by improvements in fundamentals.    

> Banks, commodity stocks lift S&P 500 to 5-year high      
> Yen rises against dollar, euro after BoJ disappoints   
> Prices up on weaker housing data, focus on debt limit   
> Gold up on Japan stimulus, U.S. stocks at 5-year high  
> Oil rises on BOJ plan, German investor sentiment        
    STOCKS TO WATCH
     --Toyota Motor Corp 
    Toyota is nearing an agreement to license its fuel-cell
vehicle technology to Germany's BMW AG, the Nikkei
reported.
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