- The share of buy orders slid from 60 to 57%
- 59% of traders are long the Buck
- The nearest resistance is located at 104.43
- The closest support rests around 103.80
- Upcoming events: US Markit Manufacturing PMI, FOMC Members Bullard and Dudley Speeches
Manufacturing activity dropped less than expected in the Third Federal Reserve District, a monthly report revealed on Thursday. The Philly Fed's Manufacturing Index came in at 9.7 in October, compared to last month's 12.8, while market analysts anticipated a steeper decrease to 5.2 during the reported period. However, the three-month average rose to 8.2 in October from the previous month's 2.7 points.
Furthermore, the six-month outlook advanced to 38.6 from September's 35.2. Other data released by the US Department of Labor showed the number first-time claims for state unemployment benefits increased 13,000 to a seasonally adjusted 260,000 in the week ended October 15, following the preceding week's upwardly revised figure of 247,000 and falling behind the 251,000 market forecast. Filings for US unemployment benefits remained below the 300,000 level for the 85th consecutive week, the longest streak since 1973. The increase in initial claims was partly due to Hurricane Matthew, which caused flooding and damage in the Southeast region. The four-week moving average, considered as a better measure of labor market trends, jumped 2,250 to 251,750 last week. Moreover, continuous claims rose 7,000 to 2.06 million in the week ending October 8.
US Markit Manufacturing PMI is the only data release on Monday
On Monday the US Markit Manufacturing PMI will be released. 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 United States. Readings above 50 imply the economy is expanding, making investors understood it as bullish for the USD, whereas a result below 50 points for an economic contraction, and weighs negatively on the currency.USD/JPY consolidates between 103.30 and 104.20
Due to lack of market movers, the US Dollar remained relatively unchanged against the Japanese Yen on Friday. The pair remains subject to weakness, as it keeps gravitating towards the monthly R1 at 103.74, in spite of technical indicators suggesting a rally is possible. The 103.33 level still represents the bottom floor, also bolstered by the weekly S1, the 20 and the 100-day SMAs. Meanwhile, the 104.22 mark represents the upper border of the likely trading range, but the base case scenario is a decline towards around 103.50. Overall, the USD/JPY pair is expected to remain within the borders of its current consolidation trend until October 27.Daily chart
Friday's decline caused the USD/JPY pair to put the up-trend to the test, but it was still insufficient for the trend-line to be fully confirmed. Today's development is likely to clarify the situation, with things initially pointing to a rally. However, a surge beyond 104.00 will be difficult to achieve, being that a nine-day down-trend rests around it.
Hourly chart
Bulls keep losing numbers, as 59% of traders are long the Buck today (previously 60%). The share of buy orders slid from 60 to 57%.
Meanwhile, there has been another decrease in the number of long positions at other brokers. Right now 52% of OANDA clients are bulls, compared to 53% on Friday. Saxo Bank clients, however, are slightly more bullish than on Friday, being that the portion of longs now takes up 59% of the market.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between September 24 and October 24, traders expect the US Dollar to appreciate to 104.59 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 74% of all forecasts fall above 102 yen, which is close to the current spot price. By far the most popular interval is 108.00-109.50, chosen by 20% of all the surveyed, compared to popularity of the 105.00-106.50, 106.50-108.00 and 109.50-111.00 intervals.