- 54% of all pending orders are to acquire the Greenback
- 69% of traders hold long positions
- Immediate resistance lies around 112.50
- The closest support rests at 111.23
- Upcoming events: US Manufacturing PMI, US Construction Spending
The US economy expanded at a stronger than initially expected pace during the final quarter of 2016 amid higher consumer spending. The Commerce Department reported on Thursday the economy grew at a 2.1% annualised rate in the Q4 of 2016, compared to the previously estimated 1.9% pace. Nevertheless, for all of 2016, the economy expanded just 1.6%, the slowest pace of growth since 2011, following a 2.6% expansion in 2015. Moreover, the most recent economic indicators suggested that economic growth slowed further in the Q1 of 2017. According to the Atlanta Fed, the US economy expanded at a 1.0% rate in the Q1.
However, economists claim that US employment data is more reliable than output data, as it paint a clearer picture of national income growth. Thursday's data also showed consumer spending advanced 3.5% during the last quarter of 2016, up from the initially reporter 3.0% growth rate. Furthermore, domestic demand climbed 3.4% in the Q4 of 2016, the fastest pace of growth in two years, as imports posted a 9.0% jump, the biggest since the Q4 of 2014. Other data released on Thursday revealed that initial jobless claims dropped 3,000 to a seasonally adjusted 258,000 in the week ending March 25, remaining below the 300,000 level for 108 consecutive weeks.
US Manufacturing PMI and Construction Spending
Among important economic data releases today attention should be paid to the US Manufacturing PMI. It is released by both, the Institute for Supply Management and Markit Economics. It captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in the US. Another relatively important event will be the US Construction Spending data release. It is an indicator that measures the total amount of spending in the US on all types of construction. The residential construction component is useful for predicting future national new home sales and mortgage origination volume.USD/JPY remains on the back foot
As was anticipated, the USD/JPY currency pair was unable to reclaim the 112.00 mark, resulting in a 53-pip loss on Friday. Nevertheless, more bearish momentum is possible, but unlikely, since the pair rebounded after approaching the descending channel's support line last week. Currently, the Buck is making its way towards the channel's upper border, with the 112.00 handle being one of the main obstacles. However, technical indicators are unable to confirm the possibility of a positive outcome today, as they keep giving bearish signals. Another setback is possible, but the US Dollar is expected to hold above 110.00, therefore, refrain from retesting the lower trend-line anytime soon.Daily chart
The USD/JPY currency pair experienced another setback on Friday, as it breached the channel's support line on Friday. The Buck found support at the 200-hour SMA, but this area is unlikely to hold for long, especially if another disappointment occurs, such as the poor US NFP reading. Nevertheless, for now this area is expected to hold.
Hourly chart
There are 69% of traders holding long positions today (previously 71%), whereas 54% of all pending orders are to acquire the Greenback.
Right now 63% of OANDA clients are bulls, compared to 65% on Friday. In the meantime, Saxo Bank clients retain a positive outlook towards the US Dollar, being that 68% of their open positions are now long and the remaining 32% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between March 03 and April 03, traders expect the US Dollar to appreciate to 114.89 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 64% of all forecasts fall above 114 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere either between 117.00 and 118.50, or between 118.50 and 120.00 yen in three months, with 16% of the survey participants choosing each of these trading ranges. At the same time, the second most popular interval was the 115.50-117.00 one, with 14% of survey participants choosing it.