- The portion of purchase orders remains unchanged at 56%
- 55% of traders have a positive outlook towards the US Dollar
- Immediate resistance lies around 114.30
- The closest support rests circa 113.43
- Upcoming events: US PPI and Core PPI, Fed Chair Yellen's Speech
Japan's economy expanded for the fourth consecutive quarter in the three-month period to December 2016 amid higher exports supported by the weak Yen. Figures released on Monday showed Japan's economy grew at an annualized pace of 1.0% in the Q4, following the preceding quarter's downwardly revised pace of 0.3% and falling behind analysts' expectations for a 0.3% expansion. Economic growth in the Q4 was mainly driven by stronger exports, which offset weak domestic demand. Last week, during a meeting with the Japanese PM Shinzo Abe, the US President Donald Trump accused Japan of using its monetary policy to weaken the Yen and benefit from it. The US Dollar rebounded sharply in the weak of the US 2016 presidential election, rising above 118 versus the Yen and rebounding from its October low of 101. Monday's data showed external demand contributed 0.2% to GDP in the Q4, with exports climbing 2.6%, the strongest growth in two years, while private consumption showed no growth, meeting analysts' projections. M
Meanwhile, housing investment advanced 0.2%, the slowest growth in four quarters, whereas capital expenditure jumped 0.9%, following a 0.3% drop in the previous quarter. The data also showed the GDP deflator, another measure of inflation, declined 0.1% in the past quarter, marking its second quarterly decline.
US PPI and Yellen's Speech
On Tuesday all attentions turns to the US fundamental figures, such as the US PPI. It measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation. Meanwhile, the Core PPI excludes food and energy readings. Another important event on Tuesday will be Fed Chair Yellen's Speech. As head of the Central Bank, her words could have a serious impact on the markets.USD/JPY: downside pressure remains
Despite all odds, the USD/JPY currency pair inched higher on Monday, breaching our bearish trend-line. An adjustment is not yet required, as a negative outcome today would still reinstate it. The 20-day SMA is the nearest support, but more attention should be paid to the weekly pivot point, which is located at 112.89. Moreover, the Buck is likely to experience trouble with further gains, as a number of strong resistance areas rests up to the 115.50 level. A successful surge beyond this mark would open the door for reaching the main target, namely the longer-term trend-line, which currently lies on top of the 118.00 level.Daily chart
As was anticipated, the 23.60% Fibo prevented the US Dollar from posting more gains against the Japanese Yen on Monday, causing the pair continue sliding down, even though above the down-trend. The exchange rate could still return below the trend-line, but risks of an upside breach would then be higher, especially with the 200-hour SMA now acting as a support.
Hourly chart
There are 55% of traders with a positive outlook towards the US Dollar today (previously 58%). Meanwhile, the portion of purchase orders remains unchanged at 56%.
Right now 51% of OANDA clients are bulls, compared to 53% on Monday. In the meantime, Saxo Bank clients remain on the bullish side, being that 55% of their open positions are now long and the remaining 45% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between January 14 and February 14, traders expect the US Dollar to appreciate to 114.05 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 50% of all forecasts fall below 114 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere either between 106.50 and 108.00 or between 111.00 and 112.50 yen in three months, with 15% of the survey participants each choosing these trading ranges. At the same time, the second most popular interval was the 115.50-117.00 one, with 13% of survey participants choosing it.