- The share of purchase orders declined from 59 to 38%
- 56% of all traders are bulls
- Immediate resistance lies circa 113.40
- The closest support rests around 111.75
- Upcoming events: US Manufacturing PMI, US Services PMI
US building permits advanced more than expected whereas homebuilding activity weakened in January, official figures revealed on Thursday. The Commerce Department reported building permits rose 4.6% to a seasonally adjusted annual pace of 1.29 million in January, following the previous month's upwardly revised 1.23 million units and surpassing analysts' expectations for a 1.23 million-unit rate. The increase caught markets by surprise, as the figure reached the highest level since November 2015, suggesting solid growth in starts in the middle of 2017.
Meanwhile, housing starts declined 2.6% to an annualised rate of 1.25 million units in the same month, following December's upwardly revised reading of 1.28 million, whereas economists expected them to increase to a 1.23. Analysts suggest that the housing market recovery is likely to be sustained by strong labor market, which supported household formation. Separately, the Philadelphia Federal Reserve said its Manufacturing Index jumped to 43.3 points in February, the highest level in 33 years, driven by a jump in new orders, which climbed to 38.0 from 26.00. Data also showed the Employment Index fell to 11.1 from 12.8, while the Business Outlook Index for the next six months slid to 53.5 points.
US Services and Manufacturing PMIs due today
On Tuesday the most impact is likely to be from the US fundamentals, namely the Services PMI and the Manufacturing PMI. The Services PMI captures business conditions in the services sector. As the services sector dominates a large part of total GDP, the services PMI is an important indicator of the overall economic condition in the US. The Manufacturing PMI, however, captures business conditions in the manufacturing sector. It is an important indicator of business conditions and the overall economic condition in the US, also taking up a significant part of total GDP.USD/JPY determined to reach consolidation trend's boundary
The overall picture did not change on Monday, as the USD/JPY pair keeps consolidating between 111.50 and 115.00. The Buck has sufficient space to edge higher again, even though the 20-day SMA and the weekly PP form resistance quite close to today's opening price. A failure to climb over this resistance cluster is likely to result in a relatively serious decline, with the tough demand area circa 111.70 limiting any possible losses. On the other hand, a successful breach of the nearest resistance would allow the 115.00 area to be retested again, making another step towards reaching the two-year down-trend.Daily chart
The Greenback found support at a possible bullish trend-line, which still requires an additional confirmation to be fully realised. The 200-hour SMA is still an obstacle on the USD/JPY pair's path, which could prompt the exchange rate to move lower and retest the trend-line in the near future.
Hourly chart
There are no 56% of traders who are bulls, compared to 57% on Monday. The share of purchase orders declined dramatically in the last 24 hours, having fallen from 59 to 38%.
Right now 59% of OANDA clients are bulls, unchanged since Monday. In the meantime, Saxo Bank clients remain on the bullish side, being that 57% of their open positions are now long and the remaining 43% 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 21 and February 21, traders expect the US Dollar to appreciate to 114.01 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 18% of the survey participants choosing this trading range. At the same time, the second most popular interval was the 114.00-115.50 one, with 15% of survey participants choosing it.