- Three quarters (75%) of all pending orders are to purchase the Greenback
- 64% of traders hold long positions
- The weekly PP at 102.69 represents immediate support
- Resistance is at 103.34
- 54% of the survey participants expect the US Dollar to cost less than 109.50 yen in three months
- Upcoming events: US Jobless Claims, Chicago PMI, FOMC Member Bullard Speech, Japanese Household Spending, Tokyo Core CPI, Tankan Manufacturing and Non-Manufacturing Indexes
According to the official data, the US consumer spending and core PCE prices advanced in line with economists' expectations in May.The Commerce Department release indicates that personal spending went up by a seasonally adjusted 0.4% during the last month, while April's data, in turn, was revised up to 1.1% from a previously recorded jump of 1.0% that had already been its largest soar in seven years. Meanwhile, consumer spending is the single biggest source of US economic growth, which implies as much as two-thirds of economic activity. The increase in following data could be explained lifted demand for automobiles and other goods, however it is worth to point out, that fears Britain's will leave the European Union could damage confidence and force households to cut consumption. In the meantime, personal income went up 0.2%, below forecasts of 0.3% gain and compared to the 0.5% in the preceding month.
Meanwhile, the Federal Reserve uses core PCE as a tool in order to determine whether to raise or lower interest rates, with the aim of preserving inflation at a rate of 2% or below. Currently, the US economy is rebounding from a dim start of the year, influenced by resurgence in consumer spending.
Vatsal Srivastava, director at the Blackwater Consulting, explained why the US Dollar advanced against the Yen last week. He said there was nothing fundamentally driving USD/JPY on Monday, but one of the key drivers was the falling oil prices, which was actually boosting the Yen; in analyst's opinion, as there was an addition cause for more QQE. Vatsal Srivastava also mentioned that "it is going to be a hard economic ride ahead and there seems to be no light on the horizon for Japan as of now." "Lets hope for the best," he summed up.
US Jobless Claims, Chicago PMI and Japanese Manufacturing and Non-Manufacturing Indexes
All attention is once again on the US data, such as the US Jobless Claims. 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. Second, the Chicago PMI, which captures business conditions across Illinois, Indiana and Michigan. This Index is an indicator of business trends and it is interrelated with the ISM Manufacturing Index. It is widely used to indicate the overall economic condition in US. A number of data from Japan is also due, such as the Tankan Non-Manufacturing Index, which is an indicator for both the growth of domestic demand and the health of the non-export sector. Also the Manufacturing Index is due, which is an indicator of Japanese economy, as Japan heavily relies on manufacturing Industry, that leads growth for the export-oriented economy.USD/JPY lacks impetus for solid gains
The USD/JPY currency pair remained flat yesterday, as bears were unable to hold the exchange rate below the weekly PP of 102.69. The pair is still stuck between the weekly PP and the monthly S2 today, with downside risks higher. However, according to technical studies, the Buck could remain relatively unchanged against the Japanese Yen for another day today. Ultimately, we should see a recovery take place, leading the exchange rate back towards the 109.00 major level, where the resistance trend-line of the current falling wedge pattern is located. Furthermore, an upside breakout would fully confirm the pattern.Daily chart
The US Dollar keeps edging higher, as seen on the hourly chart, with the resistance trend-line getting breached for the second time, meaning that more bullish momentum could follow, but only if the 200-hour SMA fails to trigger another decline.
Hourly chart
Bulls keep losing numbers, as 64% of traders hold long positions today, compared to 66% on Wednesday. At the same time, three quarters (75%) of all pending orders are to purchase the Greenback.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 68% of positions opened by its clients are long. Similarly, 59% of positions opened by Saxo Bank traders are long as well, unchanged since Wednesday.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to fall below 109.50 yen
Exactly half of the surveyed (54%) now assume that the US Dollar is to cost less than 109.50 yen after three month time. The most popular choice, however, implies that the Greenback is to cost between 111.00 and 112.50 yen in three months, selected by 17% of the voters. According to the votes collected between May 30 and June 30, the mean forecast for Sep 30 is 108.60. At the same time, 14% of the surveyed believe the Greenback could cost between 108.00 and 109.50 yen in three months.