- The number of buy orders slid from 54 to 52%
- 68% of traders hold long positions
- Resistance rests at 101.20
- The weekly PP at 100.41 represents immediate support
- 59% of the survey participants expect the US Dollar to cost less than 105.00 yen in three months
- Upcoming events: US Durable and Core Durable Goods Orders, US Jobless Claims, US Markit Services PMI, Tokyo Core CPI
Existing home sales in the United States dropped more than expected last month after rising for four consecutive months, official figures revealed on Wednesday. According to the National Association of Realtors, sales fell 3.2% to a seasonally adjusted annual rate of 5.39 million units in July, compared to the preceding month's reading of 5.57 million, whereas market analysts anticipated a 0.3% decline to 5.52 million in the reported month. US home resales were 1.6% lower than a year earlier. Nevertheless, analysts view the drop in existing home sales as temporary and expect these sales to pick up soon. Home resales declined in the Northeast, the South and the Midwest; however, jumped 2.5% in the West.
Meanwhile, the number of unsold homes on the market increased 0.9% in the seventh month of the year, whereas supply fell 5.8% and the median house price advanced 5.3% year-over-year to $244,100. Other data released by the Energy Information Administration on Wednesday showed a surprise increase in US crude oil inventories. According to the report, US crude stockpiles added 2.5 million barrels in the week ended August 19, following the 2.5% drop seen in the previous seven weeks and surpassing the 0.5 million-barrel fall forecast. After the release, Brent oil declined 1.5% and WTI dropped 1.8%, both trading below the $50 level.
US Durable & Core Durable Goods Orders are the main drivers today
Once again all focus is on the US fundamentals, namely the Durable and Core Durable Goods Orders, the Jobless Claims and the Markit Services PMI. Durable Goods Orders measure the cost of orders received by manufacturers for durable goods, which means goods planned to last for three years or more, such as motor vehicles and appliances. Core Durable Goods Orders, however, exclude the transport sector. As those durable products often involve large investments, they are sensitive to the US economic situation. The final figure shows the state of US production activity. The Initial Jobless Claims are a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labor market. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy. Finally, the Markit Services PMI, which 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. Nevertheless, early Friday the Tokyo Core CPI will be released, which is to set the mood for the Asian session that day. The Tokyo CPI is a measure of price movements obtained by comparison of the retail prices of a representative shopping basket of goods and services, These volatile products, such as food and energy, are excluded in order to capture an accurate calculation. CPI is the most significant way to measure changes in purchasing trends. The purchase power of JPY is dragged down by inflation.USD/JPY muted in anticipation of fundamental data
The USD/JPY currency pair succeeded in remaining above the 100.00 psychological level for another day, but risks of a slump even below that area persist. Technical indicators keep giving bearish signals in all timeframes, suggesting that a set of US fundamental data could disappoint today and drive the Buck lower against the Japanese Yen. The weekly PP, which is now the nearest support, will then most likely fail to hold the losses, with all focus shifting to the support cluster around 99.50, represented by the weekly S1 and the Bollinger band. On the other hand, potential gains will doubtfully exceed the 101.20 mark, where the 20-day SMA coincides with the weekly R1.Daily chart
Upon reaching the up-trend on the hourly chart, the USD/JPY currency pair broke through the nine-day down-trend and even attempted to stabilise above the 200-hour SMA. Consequently, more bearish momentum could emerge, causing the pair to ignore the newly-arisen up-trend and reach a new two-month low.
Hourly chart
There are now 68% of traders holding long positions, compared to 67% yesterday. The number of buy orders, however, slid from 54 to 52%.
Sentiment at Saxo Bank is virtually the same - 71% of the Denmark-based clients are currently holding long positions. Traders at OANDA are even more confident in Dollar's appreciation - as many as 72% of open positions are long. Using the data as a contrarian indicator, the sentiment implies a cheaper Dollar. There is little room for new buyers to enter the market, and if the bulls start closing positions on profit-taking, this could create a strong selling pressure.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to fall below 105.00 yen
Slightly more than half of the surveyed (59%) now assume that the US Dollar is to cost less than 105.00 yen after a three month time. The most popular choice, however, implies that the Greenback is to cost between 108.00 and 109.50 yen in three months, selected by 18% of the voters. According to the votes collected between July 25 and August 25, the mean forecast for November 25 is 103.50. At the same time, 13% of the surveyed believe the Greenback could cost more than 109.50 yen in three months.