- The portion of orders to buy the Buck increased from 47 to 51%
- Bulls and bears now take up 63% and 37% of the market, respectively
- The nearest resistance is located around 105.05
- The closest support rests at 103.80
- Upcoming events: Empire State Manufacturing Index, US Capacity Utilization Rate, US Industrial Production, FOMC Member Fischer Speech, MPC Member Broadbent Speech
US retail sales rose more than expected last month, official data revealed on Friday. According to the US Department of Commerce, retail sales grew 0.6% month-over-month in September, in line with analysts; expectations, whereas the preceding month's figure was revised up to -0.2% from the originally reported reading of -0.3%. On an annual basis, retail sales rose 2.7% in the reported month. Excluding automobiles, building materials, food services and gasoline, retail sales advanced 0.5% in September, following August's upwardly revised drop of 0.2% and surpassing the 0.4% rise forecast. The September growth was mainly driven by sales of automobiles, which rose 1.1% in September after falling 0.3% in August.
Other data released by the Department of Labor on the same day showed the Producer Price Index climbed 0.3% in September, compared to last month's 0.0%, while analysts anticipated an increase of 0.2% during the reported period. Year-over-year, the PPI jumped 0.7%, posting the biggest increase since December 2014. Currently, The Atlanta Fed is expecting the US economy to expand at an annualized pace of 2.1% in the Q4 after growing 1.4% in the Q3.
Focus turns to US fundamentals
Today there are events only from the US side that are likely to have an impact on the USD/JPY pair's performance, such as the US Capacity Utilization Rate, and the Industrial Production. The Capacity Utilization Rate is the percentage of the US production capacity, which is actually used over the short-time period. It is indicative of overall growth and demand in the US economy. A high capacity utilization stimulates inflationary pressures. As for Industrial Production, it shows the volume of production of US industries, such as factories and manufacturing. Up trend is regarded as inflationary, which may anticipate interest rates to rise. If high Industrial Production growth comes out, this may generate a positive sentiment for the USD.USD/JPY to continue climbing up
The US Dollar managed to overcome the Japanese Yen again on Friday, climbing back above the 104.00 major level. Technical studies once again suggest the pair is to keep edging higher, with the nearest area to limit the gains located only around the 105.00 major level, represented by the weekly R1 and the Bollinger band. A return under 104.00 seems doubtful, as a relatively strong demand area rests just under that mark, which is likely to prevent the USD/JPY pair from falling deeper down. Furthermore, the Greenback has been outperforming the Yen for three weeks straight now, and no event is expected to break this trend today.Daily chart
Friday ended with the USD/JPY currency pair edging higher again, also reconfirming the three-week up-trend. The pair continues to test the trend-line, but with risks somewhat slewed to the downside due to a breach attempt on Thursday. The 200-hour SMA is expected to hold, but a second full-blown breach of the trend-line would imply that bears are likely to eventually take over.
Hourly chart
The share of bulls and bears barely changed over the weekend, as they now take up 63% and 37% of the market, respectively. At the same time, the portion of orders to buy the Buck increased from 47 to 51%.
Meanwhile, there has been a decrease in the number of long positions at other brokers. Right now 54% of OANDA clients are bulls, compared to 47% on Friday. Saxo Bank clients, however, remain as bullish as on Friday, being that the portion of longs still takes up 56% of the market.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between September 17 and October 17, traders expect the US Dollar to appreciate to 104.63 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 78% of all forecasts fall above 102 yen, which is close to the current spot price. By far the most popular interval is 108.00-109.50, chosen by 19% of all the surveyed, compared to popularity of the 105.00-106.50, 106.50-108.00 and 109.50-111.00 intervals.