- The portion of buy orders declined from 58 to 55%
- 56% of traders hold long positions
- Immediate resistance lies circa 114.30
- The closest support rests around 113.00
- Upcoming events: US Building Permits, Philadelphia Fed Manufacturing Index, US Initial Jobless Claims, US Housing Starts
US consumer prices posted the largest increase since February 2013 last month amid higher gasoline prices, keeping the Federal Reserve on course to raise interest rates further this year. The US Commerce Department reported on Wednesday its headline CPI climbed 0.6% month-over-month in January, while analysts expected the Index to remain unchanged from the prior month at 0.3%. Excluding volatile items, core consumer prices rose 0.3% last month, after growing 0.2% in December. The January inflation jump was mainly driven by higher gasoline, apparel and motor vehicles prices. On Tuesday, the Fed Chair Janet Yellen said the Bank would probably raise rates at its next policy meeting. Other data released by the Commerce Department on Wednesday showed retail sales advanced 0.4% in January after surging 1.0% in the previous month. However, analysts anticipated an increase of just 0.1% in the reported month.
Furthermore, data showed core retail sales climbed 0.8% last month, following December's upwardly revised increase of 0.4%. A 1.6% rise in sales at electronics and appliances stores, the largest since June 2015, contributed the most to retail sales growth in January. Back in December, these stores posted a 1.1% drop in sales. In the meantime, automobile sales dropped 1.4%, the largest fall since March 2016, last month after surging 3.2% in December.
US secondary data is due today
Thursday is a relatively calm day, with the only relevant events being the Philadelphia Fed Manufacturing Survey, the US Initial Jobless Claims and the US Building Permits. The Building Permits show the number of permits for new construction projects. It implies the movement of corporate investments and tends to cause some volatility to the USD. The Initial Jobless Claims 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. Next, the Philadelphia Fed Manufacturing Survey, it is a spread index of manufacturing conditions within the Federal Reserve Bank of Philadelphia. This survey, served as an indicator of manufacturing sector trends, is interrelated with the ISM Manufacturing Index and the Index of Industrial Production. It is also used as a forecast of the ISM Index.USD/JPY to suffer another setback
As was anticipated, the US Dollar failed to outperform the Yen yesterday, although upside volatility did stretch out to the 115.00 level. Ultimately, the pair remained relatively unchanged, posting an insignificant loss, but a full-blown failure is not the case. Due to the recent breach of a seven-month down-trend, the USD/JPY pair still has the opportunity to soar towards 118.00 within a month. The only solid obstacle on the pair's path is the resistance circa 115.10, represented by the 55-day SMA, the monthly R2 and the upper Bollinger band. Today, however, the Buck is expected to struggle at climbing over the weekly R1 and monthly PP resistance area.Daily chart
The USD/JPY pair's recently-acquired bullish trend turned out to be short-lived, as the exchange rate easily dropped under 114.00 again today. From this point on the given pair is likely to extend losses until it hits the 200-hour SMA, currently around 113.15. The SMA has a ‘history' of being a good resistance for the USD/JPY, but not a support, thus, sharper losses could follow.
Hourly chart
There are 56% of traders holding long positions today (previously 51%). At the same time, the portion of buy orders declined from 58 to 55%.
Right now 53% of OANDA clients are bulls, compared to 56% on Wedndesday. In the meantime, Saxo Bank clients remain on the bullish side, being that 54% of their open positions are now long and the remaining 46% 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 16 and February 16, traders expect the US Dollar to appreciate to 114.19 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 54% of all forecasts fall above 114 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 106.50 and 108.00 yen in three months, with 17% of the survey participants choosing this trading range. At the same time, the second most popular interval was the 115.50-117.00 one, with 14% of survey participants choosing it.