- The share of buy orders increased from 63 to 67%
- 66% of all open positions are long
- Resistance rests around 103.40
- The weekly R1 and the 55-day SMA around 102.70 represent immediate support
- 63% of the survey participants expect the US Dollar to cost less than 105.00 yen in three months
- Upcoming events: US ADP Non-Farm Employment Change, Chicago PMI, US Pending Home Sales, US Crude Oil Inventories Japanese Capital Spending
Confidence among American shoppers improved unexpectedly in August, according to the Conference Board's monthly survey. The survey's Consumer Confidence Index increased to 101.1 points in the eight month of the year, compared to July's reading of 96.7, while market analysts anticipated a slighter acceleration to 97.1 in the reported month. Nevertheless, back in August 2015, the indicator was higher at 101.4 points. The survey is a closely-followed barometer of consumer attitudes towards business conditions, personal finances, jobs and short-term outlook. The data showed that 30% of respondents stated that business conditions were "good" in August, following July's 27.3%, whereas 18.4% stated conditions were "bad", unchanged from last month. 17.3% of respondents predicted an improvement in the next six months, compared to last month's 15.7%, while 11.1% predicted deterioration, down from July's 12.4%.
The share of respondents expecting their incomes to improve remained resilient; however, the outlook on the job market was mixed. Consumer sentiment among Americans remained in the positive territory for more than a year. A reading of 90 or above indicates economic expansion. The US economy is mostly driven by consumer spending, which accounts for about 70% of all economic growth.
US ADP Non-Farm Employment Change is the main event today
Today all attention is to be paid on the US ADP Non-Farm Employment Change. It is a measure of the change in the number of employed people in the US. Generally speaking, a rise in this indicator has positive implications for consumer spending, stimulating economic growth. So a high reading is traditionally seen as positive, or bullish for the USD, while a low reading is seen as negative, or bearish. Another relatively important event will be the US Pending Home Sales. It is a leading indicator of trends of the housing market in the US. It captures residential housing contract activity of existing single-family homes. As the housing market is considered as a sensitive factor to the US economy. It generates some volatility for the USD.USD/JPY on the edge of breaking eight-month down-trend
The Greenback managed to appreciate against the Japanese Yen yesterday, with trade closing in front of the 113.00 major level—right in the middle of the immediate resistance cluster. With the anticipation of the US ADP Employment Change data today, the Buck is also expected to post more gains. However, the bullish development is likely to be limited by approximately 60 pips, as a surge higher would imply a breach of the eight-month descending channel's resistance line. Consequently, the USD/JPY currency pair could make a U-turn when touching this down-trend, retreating back to 102.00. Meanwhile, technical indicators are unable to confirm either scenario.Daily chart
Tuesday's rally only supports the possibility of more bullish momentum to come, however, the pair is now approaching the resistance trend-line, which remains the main obstacle for bulls to keep prevailing.
Hourly chart
Bullish sentiment barely changed, as 66% of all open positions are long (down from 67%). The share of buy orders increased from 63 to 67%.
Sentiment at Saxo Bank is virtually the same - 64% of the Denmark-based clients are currently holding long positions. Traders at OANDA are slightly less confident in Dollar's appreciation - as many as 68% 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
More than a half expect the exchange rate to fall below 105.00 yen
Slightly more than half of the surveyed (63%) 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 17% of the voters. According to the votes collected between July 31 and August 31, the mean forecast for November 31 is 103.22. At the same time, 13% of the surveyed believe the Greenback could cost either between 103.50 and 105.00 yen or even more than 109.50 yen in three months.