The Nikkei 225, one of the world’s most widely used indices, is gearing up for a very strong week ahead. The Nikkei is predicted to rise over 80 points over the coming days as it enters into a period of recovery following the fall last week.
This upward movement on the Nikkei is predicted to be an obvious sign that the US Fed has started unwinding its stimulus policy. The easing will have a knock-on effect as the yen weakens and this will lead to a strengthening of the Japanese currency.
The Nikkei is set to gain over three points during the coming week, giving the index a very strong week ahead. Although the Nikkei does not follow any form of major trend, it is likely to gain around three points for the week ahead, thus giving it a healthy rise over the next week.
It is a well known fact that many investors are lining up to take advantage of the strong rise on the Nikkei index and are stepping into Japanese shares. The foreign exchange (forex) market is set to expand significantly after the dollar strengthened during the week ahead, thereby causing a significant depreciation in the Japanese currency.
If this is correct, the US is set to see a five percent increase in GDP this year, making it one of the world’s fastest growing economies. This bullish indicator from the Nikkei is expected to continue for the next week, which will cause the Japanese currency to strengthen further.
The Nikkei also predicts that a major economic slowdown will come on the heels of the UK’s vote to leave the European Union, which is expected to drive down the value of the pound against the Euro. This will cause the Nikkei to fall by three percent, giving it a decent slump over the coming weeks.
On the other hand, the Nikkei forecasts a continuation of a weak economic outlook. Although the rising strength in the global stock markets will contribute positively to the index, it is expected that the UK economy will be hit hard as the market stabilises.
However, a weak economic outlook will have a strong impact on the broader Japanese economy, which is forecast to stay on the sidelines during the coming week. This will lead to a weak foreign exchange rate that will push the Nikkei lower, giving it a minor dip over the next two weeks.
The Nikkei is forecast to rise over seven points during the coming week, which is enough to give it a strong week ahead. This will be accompanied by a slight decrease in the Yen, meaning that the Japanese currency will weaken slightly.
In terms of the next months, it is clear that the Nikkei will have to be stronger in order to break through. If the domestic market continues to be weak, it is possible that the FX market will get even weaker, which will hinder the Nikkei from gaining any momentum in the coming months.
For this reason, it is recommended that those who wish to invest in the index should not rush into their stock decisions. Since the Nikkei is based on the foreign exchange market, it is wise to take a look at both the domestic and foreign markets before deciding upon a particular investment.
Those who invest in the Nikkei Index today can expect to reap massive rewards in the years to come. Although the Nikkeimay suffer through the coming week, it is predicted to regain lost ground over the next few months, giving it a very healthy rise over the coming months.