Nikkei Fully Recovered After The Earthquake In 2011 - 27.12.2012

Yen keeps weakening on the last trading days of the year. The USDJPY currency pair rose this morning to 85.86, the highest level since September 2010 (see the chart). The newly elected Prime Minister - Shinzo Abe called the names of cabinet ministers yesterday, making an accent on the fact that intense monetary stimulus will be one of the key aspects in his economic policy. Thus, overcoming deflation and a relatively high rate of the national currency becomes a priority for new government. USDJPY, daily chart Due to that, the growth in Japanese stock markets continues. Tokyo Nikkei 225 reached (while closing: 10322.98), the level it has not been raised to for two and a half years, thus it was fully recovered since the earthquake in March 2011. Tomorrow there will be a significant block of macroeconomic data published from Japan, where the highest attention should be paid to November CPI, the unemployment rate and the industrial production dynamics. Nikkei 225, дневной график Euro is traded relatively stable vs. US dollar. During two last weeks the pair hung up within the range 1.3150-1.3250, according to closing prices (see the chart). Even though the higher growth is observed, it is still limited - fears about "fiscal cliff" in the USA are still holding investors enthusiasm back. If the USA government is not able to quickly come to an agreement to ensure the fiscal policy stability, we may watch the sharp strengthening in the US dollar, especially vs. risk-sensitive currencies, such as Canadian and Australian dollar. EURUSD, дневной график Growth in investors' concerns is sharply reflected in the dynamics of the US stock indices. Within a week S & P500 and DJI lost nearly 2%. In addition, despite the low trading activity induced by the Christmas holidays, the volatility index VIX, reflecting the fear level and having a tendency of increase during instability periods, rose yesterday by 4.8%, to 19.48, reaching at closing for the highest level since July of this year (see the chart). VIX, volatility index