- 59% of all pending orders are to buy the Buck
- 53% of all open positions are long
- Immediate resistance lies at 113.32
- The closest support rests circa 112.00
- Upcoming events: US ADP Non-Farm Employment Change, US Manufacturing PMI, US Crude Oil Inventories, US Construction Spending, US Federal Funds Rate
Consumers' mood in the United States deteriorated markedly in January, a monthly survey revealed on Tuesday. The Conference Board said its Consumer Confidence Index dropped to 111.8 points in January after hitting 113.7, the highest level in 15 years, in the preceding month, while market analysts anticipated a slighter decrease to 112.6 during the reported period. The survey showed that consumers' assessment of current conditions improved in January. Those stating business conditions are "good" increased to 29.3% from 28.6% in December, whereas those saying conditions were "bad" decreased to 16.1% from 17.8% in the prior month. Nevertheless, consumers' short-term outlook turned significantly more negative in January, falling to 23.1% from the previous month's 24.7%.
Furthermore, the share of those expecting business conditions to worsen rose to 10.7% from December's 8.9%. In addition, the proportion of those expecting more jobs in the upcoming months fell to 19.8% from December's 21.7%, while the percentage of those expecting less jobs remained unchanged at 14.0%. The proportion of those expecting their income to improve declined to 18.0% from 21.5%, whereas the share of those expecting an income drop climbed to 9.6% from 8.6% registered in the previous month.
US data in focus again
Once again all attention turns to the US fundamentals. First of all, the ADP Non-Farm Employment Change, which 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. Construction Spending could also have some impact, as it is an indicator that measure the total amount of spending in the US on all types of construction. The residential construction component is useful for predicting future national new home sales and mortgage origination volume. The most important event today, however, is the Federal Funds Rate. With a pre-set regularity, a nation's Central Bank has an economic policy meeting, in which board members took different measures, the most relevant one being the interest rate that it will charge on loans and advances to commercial banks. In the US, the Board of Governors of the Federal Reserve meets at intervals of five to eight weeks, in which they announce their latest decisions. A rate hike tends to boost the local currency, as it is understood as a sign of a healthy inflation. A rate cut, on the other hand, is seen as a sigh of economic inflationary woes and, therefore, tends to weaken the local currency. If rates remain unchanged, attention turs to the tone of the FOMC statement, and whether the tone is hawkish or dovish over future developments of inflation.USD/JPY climbs over 113.00 ahead of ADP data
The Greenback experienced another leg down yesterday, having once again lost nearly 100 pips against the Japanese Yen. However, the exchange rate closed above the 112.60 psychological support level, which should technically now cause a U-turn. Technical indicators, on the other hand, are giving bearish signals, and the 20-day SMA recently crossed the 55-day one to the downside—also providing a sell signal. As a result, downside risks are relatively high today, in which case price could fall even below the 112.00 mark. With a lot of uncertainty present in the markets recently, we should not rule out the possibility of bulls taking over, but with the 115.00 handle remaining intact.Daily chart
After the breach of the possible ascending channel's support line on Monday, the USD/JPY pair's performance got only worse, as it suffered even more losses on Tuesday. However, the pair appears to have bottomed out at 112.10, now making its way back up. However, the 200-hour SMA and the 23.60% Fibo now form a solid resistance area, which could turn back the tide for the US Dollar.
Hourly chart
Today 53% of all open positions are long and 59% of all pending orders are to buy the Buck (previously 49% and 53%, respectively).
Right now 54% of OANDA clients are bears, compared to 52% on Tuesday. In the meantime, Saxo Bank clients remain on the bullish side, being that 56% of their open positions are now long and the remaining 44% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between January 01 and February 01, traders expect the US Dollar to appreciate to 116.67 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 120.00 and 121.50 yen in three months, with 13% of the survey participants choosing this trading ranges. At the same time, the second most popular intervals were the 106.50-108.00 and the 111.00-112.50 ones, with 10% of survey participants choosing each of them.