- The share of purchase orders declined from 62 to 47%
- Market sentiment remains bullish at 63%
- Immediate resistance lies фкщгтв 113.50
- The closest support rests circa 111.40
- Upcoming events: US Initial Jobless Claims, US Wholesale Inventories, US Import Prices, US Federal Budget Balance
The US trade deficit dropped more than expected in December after two straight months of increases amid higher exports. The Commerce Department reported the country's trade gap narrowed 3.2% to $44.3 billion in the reported month, following November's upwardly revised deficit of 45.7 billion, while market analysts held expectations for a decrease to $45.0 billion. The December improvement was driven by stronger exports that posted a 2.7% monthly increase to $190.7 billion, the highest level since April 2015. Advanced technology goods were the main contributor to export growth.
However, US exports remained under pressure from the strong Dollar, which rose 4.4% against other major currencies in 2016. The data showed shipments to the EU climbed 10.1%, with exports to Germany advancing 12.4%. The US President Donald Trump accused the EU's largest economy of using the weak Euro to exploit the US. Meanwhile, imports of goods and services jumped 1.5% to $235.0 billion in December, the highest since March 2015. The key drivers of import growth were attributable to higher oil prices and stronger domestic demand. Separately, the JOLTS monthly report released on Tuesday showed job opening in the US totalled 5.50 million in December, slightly down from November's revised 5.51 million and below a 5.56 million market forecast.
Jobless Claims due today
This whole weak is quiet in terms of fundamental data releases, leaving the main ones to be released on Friday. From the US side attention could be paid to the Import Price Index. It informs the changes in the price of imported products into the US. The higher the cost of imported goods, the stronger the effect they will have on inflation, redunding in a higher probability of a rate rise. On Thursday, however, some impact could be anticipated from the Initial Jobless Claims, as they are a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labor market. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy.USD/JPY enters 100-pip limbo
The US Dollar once again slid versus the Japanese currency, continuing to gravitate towards the 112.00 major level. However, a drop below the 111.60 mark, namely the 11-week low, is doubtful, as this level represents the lower boundary of the USD/JPY pair's current consolidation period. At the same time, the upper border les somewhere between 112.60 and 112.80. Consequently, the Buck now has the potential to edge approximately 65 pips higher, even though technical studies are unable to confirm this scenario; instead they suggest the American Dollar is to retest the 111.60 level, which in turn is bolstered by the weekly S1 and the lower Bollinger band.Daily chart
On the hourly chart the situation is largely unchanged, with the exception of the 200-hour SMA moving lower, which implies that the USD/JPY currency pair is to encounter resistance much sooner, resulting in another spark of bearish momentum. The bearish trend-line is getting more difficult to reach, as a result.
Hourly chart
Although not as strong as yesterday, but market sentiment remains bullish at 63%. The share of purchase orders declined from 62 to 47%.
Right now 54% of OANDA clients are bulls, unchanged since 54% on Wednesday. In the meantime, Saxo Bank clients remain on the bullish side, being that 58% of their open positions are now long and the remaining 42% 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 09 and February 09, traders expect the US Dollar to appreciate to 114.62 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 65% of all forecasts fall below 117 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere either between 111.00 and 112.50 yen or between 120.00 and 121.50 yen in three months, with 15% of the survey participants each choosing these trading ranges. At the same time, the second most popular interval was the 115.50-117.00 ones, with 14% of survey participants choosing it.