- The share of purchase orders rose to 69%.
- Market sentiment is equally divided between the bulls and the bears
- Immediate resistance lies at 114.80
- The closest support rests around 114.00
- Upcoming events: US GDP Annualized, US GDP Price Index, US Durable and Core Durable Goods Orders
Sales of new homes in the Unites States dropped to a 10-month low last month, official figures revealed on Thursday. According to the Commerce Department, home sales fell 10.4% to a seasonally adjusted annual pace of 536,000 units in December, whereas the November reading was revised up to 598,000 from the originally reported 592,000 unit-pace. Market analysts anticipated a slight decrease to 585,000 units during the reported period. The December figure marked the first monthly decline in the last three months. On an annual basis, sales were down 0.4% compare to December 2015. For all of 2016, new home sales grew 12.2% to 563,000 units, the highest level since 2007. Nevertheless, a severe lack of houses for sale continue to challenge the market. Earlier this week, the NAR said that the supply of preowned houses on the market fell to a 17-month low last month. Analysts say that the rise in mortgage rate is unlikely to have a major impact on the housing market. However, forecasts suggest further increases if the Federal Reserve keeps its promise to raise interest rates at least three times in 2017.
Separately, the Labor Department reported initial jobless claims rose to 259,000 in the week ending January 20, following the preceding week's 237,000 filings and surpassing analysts' expectations for an increase to 247,000.
US data in focus
On Friday all focus turns to the US fundamentals, such as the Annualized GDP and the Durable Goods Orders. GDP Annualized shows the monetary value of all the goods, services and structures produced within a country in a given period of time. GDP Annualizes is a gross measure of market activity, because it indicates the pace at which a country's economy is growing or decreasing. Another relevant event will be the GDP Price Index, which gauges the change in the prices of goods and services. Changes in the GDP Price Index are followed as an indicator of inflationary pressure that may anticipate interest rates to rise. As for the Durable Goods Orders, the 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 Core Durable Goods Orders, however, exclude the transport sector.USD/JPY attempts to reclaim 115.00
A strong rally on Thursday caused the USD/JPY pair to breach the four-week down-trend, with even the second resistance area failing to limit the gains. The Buck is poised for another bullish development today, with the main target being the 116.00 mark, where the weekly R1 and the monthly PP are located at. The Greenback, however, is likely to struggle at reaching this level, as it has another supply area on its path circa 114.90, formed by the 20 and the 55-day SMAs. Moreover, technical indicators are unable to confirm this outlook, as they are giving mixed signals today.Daily chart
The hourly chart supports the situation on the daily one, as here the down-trend has also been breached yesterday. Consequently, more bullish momentum should follow, with the main target now being the second 18-month down-trend, currently located at 117.00
Hourly chart
Market sentiment is now equally divided between the bulls and the bears. At the same time, the share of purchase orders added nine percentage points, having risen to a total of 69%.
Right now 50% of OANDA clients are bulls, compared to 52% on Thursday. In the meantime, Saxo Bank clients are barely managing to remain on the bullish side, being that 53% of their open positions are now long and the remaining 47% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between December 27 and January 27, traders expect the US Dollar to appreciate to 117.30 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 52% of all forecasts fall above 117 yen, which is above 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 15% of the survey participants choosing this trading range. At the same time, the second most popular intervals were the 114.00-115.50, the 115.50-117.00 and the 120.00-121.50 ones, with 11% of survey participants choosing them.