- Pending orders are equally divided between the buy and the sell ones
- 54% of traders have a negative outlook towards the Buck
- Immediate resistance lies around 117.13
- The closest support rests around 116.00
- Upcoming events: US Existing Home Sales, US Crude Oil Inventories
Both building permits and housing starts dropped more than expected last month, suggesting that the Q4 growth rate could be possibly revised downwards. According to the US Department of Commerce, new-home construction fell 18.7%, the biggest decrease in almost two years, to a seasonally adjusted annual rate of 1.09 million units in November, while market analysts anticipated a slight deceleration to 1.23 million during the reported period. Housing starts tend to be volatile on a monthly basis. Meanwhile, the October figure was revised up to a 1.34 million-unit pace, the highest level since July 2007, from the originally reported 1.32 million. The Commerce Department also reported that building permits declined 4.7% to an annualized rate of 1.20 million units, following October's upwardly revised reading of 1.26 million, whereas economists expected them to decrease to a 1.24 million-unit pace.
Nevertheless, the National Association of Homebuilder's sentiment measure, released on Thursday, jumped to 70 points in December, the highest level in 11 years, compared to the previous month's figure of 63. December's increase was driven in large part by Donald Trump's surprise victory in the US presidential elections last month.
No major events until Thursday
There are no significant events due until Thursday. Tuesday is a completely quiet day, but on Wednesday some attention could be paid to the US Existing Home Sales. They are released by the National Association of Realtors and 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. Generally speaking, a high reading is positive for the Dollar, while a low reading is negative.USD/JPY edges higher on BoJ statement
The immediate support, namely the weekly PP, somewhat managed to prevent the USD/JPY currency pair from falling under 117.00. Today's BoJ statement weakened the Japanese domestic currency, as was expected, allowing the US Dollar to take the upper hand. However, in spite of the weaker Yen, the pair is unlikely to rise above the 118.50 level, as it failed to cross this threshold on several occasions previously. Moreover, a strong resistance area is located just above this level, which is to contribute to limiting the gains. The base case scenario is a close around the 118.00 level.Daily chart
On the hourly chart the US Dollar is seen extending its bullish momentum against the Japanese Yen, now aiming to reclaim the 118.20 level. However, another setback is possible, causing the pair to retest the up-trend ahead of the Thursday's US GDP reading.
Hourly chart
There are 54% of traders with a negative outlook towards the Buck today (previously 56%). Meanwhile, all pending orders in the 100-pip range are equally divided between the buy and the sell ones.
Meanwhile, there has been an increase in the number of long positions at other brokers. Right now 53% of OANDA clients are bears, compared to 56% on Monday. In the meantime, Saxo Bank clients are slightly on the bearish side, being that the portion of shorts takes up 51% of the market.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between November 20 and December 20, traders expect the US Dollar to appreciate to 115.84 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 64% of all forecasts fall above 114 yen, which is close to the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 117.00 and 118.50 yen in three months, with 15% of the survey participants choosing this trading range. Meanwhile, the second most popular intervals is the 120.00-121.50 one, with 14% of the votes each, also followed by the 118.50-120.00 interval, chosen by 12% of all the surveyed.