- The share of purchase orders inched up from 59 to 62%
- Market sentiment remains bullish at 64%
- Immediate resistance lies at 111.78
- The closest support rests around 111.30
- Upcoming events: US HPI, US Existing Home Sales, US Crude Oil Inventories
The number of Americans who filed for unemployment insurance last week decreased to 241,000, a survey from the Labor Department revealed on Thursday, following the preceding week's 243,000 filings. Meanwhile, market analysts anticipated a slight rise to 245,000 during the reported period. The number of new residential building permits issued in February fell 6.2%, the Census Bureau revealed on Thursday. Nevertheless, housing construction advanced 3% and was mainly driven by one-family house applications, whose growth hit a record since September 2007. The spike in construction was mainly attributable to the robust job market and healthier finances. Yet, high mortgage costs and increasing real estate prices remain an issue for potential home buyers. Overall, the situation in the home-building industry remains positive, as the housing market index reached a 12-year high. The diffusion index fell to 32.8 in March, the Philadelphia Fed reported on Thursday.
Nonetheless, it remained positive for eight consecutive months. The difference between firms who reported an increase in activity against decrease was 33%. Similarly, the difference between firms reported a rise in employment against unemployment was 17%. So, in general, regional manufacturers maintained optimism.
No significant data due
Today traders can focus on the US Existing Home Sales and the Housing Price Index. The Existing Home Sales and the HPI provide an estimated value of housing market conditions. As the housing market is considered as a sensitive factor to the US economy, it generates some volatility for the USD. Ultimately, no significant developments are to occur due to fundamental data releases by the end of the week, the most impact is likely to be from politics or officials' speeches.USD/JPY to fall for the seventh day in a row
Risk-aversion was driving the markets yesterday, causing the USD/JPY pair to drop for the sixth consecutive day. The Buck dropped 85 pips, which was just sufficient to close below the 11.75 psychological support, not to mention the breach of the ascending channel pattern. The US Dollar is now likely to keep edging lower, with the nearest support being around 111.30, formed by the lower Bollinger band and the monthly S1. However, according to the RSI indicator, the Greenback is poised to make a U-turn soon, with today expected to be the last day of a nearly 400-pip slump.Daily chart
The USD/JPY currency pair appears to have formed a descending channel pattern once it began sliding down from 115.00. At the moment, the Buck is moving lower, towards the 111.00 mark, from where it will have an opportunity to reconfirm the lower trend-line of the channel and find sufficient support for a recovery.
Hourly chart
Although not as strong as yesterday, but market sentiment remains bullish at 64% (previously 68%). Meanwhile, the share of purchase orders inched higher, namely from 59 to 62%.
Right now 63% of OANDA clients are bulls, compared to 61% on Tuesday. In the meantime, Saxo Bank clients retain a positive outlook towards the US Dollar, being that 61% of their open positions are now long and the remaining 39% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between February 22 and March 22, traders expect the US Dollar to appreciate to 115.40 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 above 114 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 118.50 and 120.00 yen in three months, with 20% 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.