- The number of sell orders surged from 48 to 52%
- 53% of traders are short the US Dollar
- Immediate resistance lies around 111.41
- The closest support rests around 110.65
- Upcoming events: US Existing Home Sales, US Durable and Core Durable Goods Orders
US consumer prices see the biggest increase in six months in October amid higher gasoline and rent costs. According to the US Department of Labor, the Consumer Price Index advanced 0.4% last month, following September's gain of 0.3%. On a yearly basis, consumer prices grew 1.6% in October, the largest annual increase since October 2014, up from the preceding month's 1.5%. Both readings came in line with analysts' expectations.
Nevertheless, the so-called core CPI, which excludes prices for volatile items such as energy and food, rose 0.1% in the reported month, unchanged from September, while market analysts anticipated a slight increase to 0.2%. Year-over-year, core consumer prices fell to 2.1% in October, following the prior month's 2.2% gain. Higher inflation as well as the strong labor market are likely to encourage the Federal Reserve to raise its key interest rates at its next meeting in December. The Central bank increased its key overnight interest rate in December 2015 for the first time since the global financial crisis. The Labor Department said gasoline prices surged 7.0%, up from September's 5.8%, whereas food prices remained unchanged. Within components of the core CPI, rents rose 0.4%, while medical care costs were unchanged. The price of prescription drugs rose 0.2%.
No significant events until Wednesday
There are no events due to influence the USD/JPY pair's performance today. Tuesday is also relatively quiet, but some attention could be paid to the US Existing Home Sales. They provide an estimated value of housing market conditions. As the housing market is considered as a sensitive factor to the US economy, it generates some volatility for the USD. The main events, however, will be on Wednesday, namely the US Durable and Core Durable Goods Orders. They 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. 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 Core Durable Goods Orders, however, the transport sector in order to capture a more accurate calculation.USD/JPY to preserve the channel pattern
The USD/JPY currency pair has been trading within the borders of an ascending channel pattern for two consecutive weeks now and Friday was not an exception. The Buck successfully breached the monthly R3, but was unable to overcome the 111.00 psychological level. The Bollinger band around 111.37 represents immediate resistance today, but is unlikely to keep the Greenback at bay, with the channel's upper border and the weekly R1 forming a much stronger supply area around 112.30. A decline is also doubtful, as the nearest support, namely the up-trend, is reinforced by the monthly R3. Meanwhile, technical studies are also in favour of the positive outcome today.Daily chart
On Friday the US Dollar continued to outperform the Japanese Yen, therefore, managing to retain its position within the borders of an ascending channel pattern. The pair is expected to remain inside this trading range, as there is no impetus present that could trigger a breakout.
Hourly chart
Today 53% of traders are short the US Dollar, compared to 54% on Friday. The number of sell orders surged from 48 to 52%.
Meanwhile, there has been an increase in the number of long positions at other brokers. Right now 57% of OANDA clients are bears, compared to 55% on Friday. In the meantime, Saxo Bank clients are still slightly on the bearish side, being that the portion of shorts takes up 52% of the market.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between October 21 and November 21, traders expect the US Dollar to appreciate to 107.43 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 53% of all forecasts fall below 108 yen, which is close to the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 111.00 and 112.50 yen in three months, with 24% of the survey participants choosing that trading range. Meanwhile, the second most popular interval is the 105.00-106.50 one, chosen by 17% of all the surveyed, compared to popularity of the 106.50-108.00, 108.00-109.50 and 109.50-111.00 intervals.