- 54% of all pending orders are to sell the US Dollar
- 67% of all open positions are short
- Immediate resistance lies around 112.15
- The closest support rests at 110.82
- Upcoming events: US Durable and Core Durable Goods Orders, US Crude Oil Inventories, US New Home Sales, US Markit Manufacturing PMI, US HPI, FOMC Meeting Minutes, Japanese Marking Manufacturing PMI
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%.
Today's focus is on the US Durable Goods Orders and the FOMC Meeting Minutes
The main fundamental events today are from the US side, 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. Nevertheless, the most important event on Wednesday will be the FOMC Meeting Minutes. FOMC stands for the Federal Open Market Committee, that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses and risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy. Furthermore, there are some secondary events, such as the US New Home Sales and the Markit Manufacturing PMI. The New Home Sales are an important measure of housing market conditions. House buyers spend money on furnishing and financing their homes so as a result the demand for goods, services and the employees is stimulated. As for the Markit Manufacturing PMI, 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 US.USD/JPY struggles to retain its position above 111.00
The American Dollar barely managed to post any gains yesterday, but, nonetheless, succeeded in climbing over the 111.00 psychological level. As a result, the ascending channel pattern was prolonged for another day, but the lower trend-line of the channel keeps falling under pressure. In case of another bearish development today the pattern is likely to completely be broken. However, in order for that to occur the exchange rate has to fall below the immediate support, namely the monthly R3, which already prevented two negative outcomes this week. Moreover, technical indicators suggest the USD/JPY pair is to edge higher for another day, thus, preserve the channel pattern.Daily chart
On the hourly chart the USD/JPY pair is seen breaking through the channel's support line more clearly. At the moment the exchange rate is anchored around the 111.00 mark, but today's fundamental data is likely to cause either upside or downside volatility. Risks are skewed to the upside, however, the pierced channel's support line indicates that a drop towards the 200-hour SMA also has a solid chance to occur.
Hourly chart
There are still 67% of traders being short the Buck, while 54% of all pending orders are to sell the US Dollar, compared to 57% on Tuesday.
Meanwhile, there has been an increase in the number of long positions at other brokers. Right now 62% of OANDA clients are bears, compared to 61% on Tuesday. In the meantime, Saxo Bank clients are still slightly on the bearish side, being that the portion of shorts takes up 55% 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 23 and November 23, traders expect the US Dollar to appreciate to 107.59 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 54% 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 21% of the survey participants choosing that trading range. Meanwhile, the second most popular interval is the 105.00-106.50 one, chosen by 16% of all the surveyed, compared to popularity of the 106.50-108.00, 108.00-109.50 and 109.50-111.00 intervals.