- The share of buy orders inched down to 61% from 56%
- 74% of all open positions are long today,
- The weekly PP at 104.87 represents immediate resistance
- Support is at 103.34
- 52% of the survey participants expect the US Dollar to cost less than 112.50 yen in three months
- Upcoming events: US Markit Services PMI, FOMC Member Powell Speech, Fed Chair Yellen Testimony
The US Dollar's performance were rather mild, but with the currency still declining against most of other major peers. Driven by ‘Bremain' confidence, the Sterling managed to appreciate 2.24% against the American Dollar, being the largest USD-cross slump. Furthermore, the Buck edged significantly lower against commodity-based currencies, namely 0.88% versus the Kiwi, 0.83% against the Aussie and 0.68% versus the Loonie, amid an increase in oil prices yesterday. At the same time, the EUR/USD surged only 0.30%, followed by a 0.21% drop of the USD/JPY pair. The only rally, however, was detected against the Swiss Franc (0.22%).
As reported by the US Census Bureau, there were 1.164 million constructions of residential buildings started in the US in May. The data beat expectations of 1.15 million, while still being below the April's reading of 1.172 million. During the previous month there was a sharp increase in the construction, but a lot of homes on the market became less affordable, amid a rather sharp increase in prices for those homes. Mortgage rates, however, are at low levels, somewhat boosting demand for apartment and house acquisitions, but, nonetheless, for some prices remain too high. Single-family houses have a higher impact than apartments, as they provide a larger economic boost and they rose 0.3% up to 764,000, while apartments showed only 396,000 residences, thus, barely changed compared to the previous month's data.
Furthermore, only 1.138 million building permits for construction were issued in the US last month, with the data slightly failing to meet expectations of 1.15 million. Among permits the single-family ones provided concerns, as they showed the largest monthly slowdown during the past 15 months. The permits for houses dropped 2% down to 726,000 units, while the apartment permits were at 381,000 units. This weaker data is unlikely to have a serious effect on the GDP second estimate, as it is forecasted to show signs of improvement, being driven by higher demand in household.
Vatsal Srivastava, director at the Blackwater Consulting, explained why the US Dollar advanced against the Yen last week. He said there was nothing fundamentally driving USD/JPY on Monday, but one of the key drivers was the falling oil prices, which was actually boosting the Yen; in analyst's opinion, as there was an addition cause for more QQE. Vatsal Srivastava also mentioned that "it is going to be a hard economic ride ahead and there seems to be no light on the horizon for Japan as of now." "Lets hope for the best," he summed up.
US Markit Services PMI and Yellen's Testimony
Today from the US side, the Markit Services PMI is due. The Services PMI is released by the Markit Economics, captures business conditions in the services sector. As the services sector dominates a large part of total GDP, the services PMI is an important indicator of the overall economic condition in the US. Another even is Fed Yellen's Testimony. As head of the central bank, which controls short-term interest rates, she has more influence over the nation's currency value than any other person. More insight concerning future interest rate hikes and the overall economic condition in the US is expected.USD/JPY anchored around 104.00
Risk aversion keeps driving the USD/JPY currency pair, being that the Greenback experienced another decline against the Japanese Yen on Monday. This time the 104.00 level was pierced, suggesting that more bearish momentum could follow. Technical studies in the daily timeframe also retain their bearish signals, implying that the pair is to sustain another sell-off. The monthly S2, located at 103.34, is the closest support, while the support trend-line at 102.46 is the intraday bottom target. Furthermore, there is an interim support just under the 103.00 mark, that could keep the losses limited, while the upper border is represented by the weekly PP at 104.87.Daily chart
The Greenback appears to be consolidating against the Yen in a rather tight range, namely between 103.60 and 104.80. However, this consolidation is unlikely to last, as the pair is to reach a down-trend in two days tops, which should either spark more USD/JPY selling, or cause a steep rally.
Hourly chart
Still 74% of all open positions are long today, whereas the share of buy orders inched down to 61% from 56% on Monday.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 70% of positions opened by its clients are long. Similarly, 57% of positions opened by Saxo Bank traders are long as well, compared to 56% on Monday.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to fall below 114 yen
Slightly more than half of the surveyed (52%) now assume that the US Dollar is to cost less than 112.50 yen after three month time. The most popular choice, however, implies that the Greenback is to cost higher than 117.00 yen in three months, both selected by 17% of the voters. According to the votes collected between May 21 and June 21, the mean forecast for Sep 21 is 111.31. At the same time, 14% of the surveyed believe the Greenback could cost between 114.00 and 115.50 yen in three months.