Nikkei set to fall; weak global shares, strong yen, Bernanke in focus
TOKYO, July 17 (Reuters) - Japan's Nikkei share average is expected to fall on Wednesday as weakness in global markets and the strong yen soured sentiment, with investors also cautious ahead of the U.S. Federal Reserve chairman's appearance before Congressional committees. Market participants said the Nikkei was likely to trade between 14,400 to 14,600 on Wednesday after rising 0.6 percent to a 7-1/2 week high of 14,599.12 in the previous session. Nikkei futures in Chicago closed at 14,515, down 0.6 percent from the close in Osaka of 14,600. Analysts said that with some technical signs started showing that the Nikkei would soon be overbought, a temporary correction is possible. The Nikkei is currently trading 7.4 percent above its 25-day moving average of 13,597.55. "Investors are staying on the sidelines before the big events. They hesitate to take large positions before (Federal Reserve Chairman Ben) Bernanke's testimony and Japan's upper house election," said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities. "Investors are focused on when the Fed will scale back stimulus, and while the LDP's victory is widely expected, they want to see the results before they bet on anything." Prime Minister Shinzo Abe's Liberal Democratic Party-led bloc is expected to win a hefty majority in the upper house election on July 21, ending a "twisted parliament" in which the opposition controls the upper chamber. Market analysts said that exporters may weaken on Wednesday as the dollar dropped 0.70 percent to 99.14 yen on Tuesday on expectations that Bernanke's testimony will reiterate that U.S. monetary policy will remain extremely accommodative.
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