- The buy and the sell order ratio is now equal to one
- 65% of traders hold long positions
- Resistance rests around 103.50
- The weekly R2 and the 55-day SMA around 103.00 represent immediate support
- 62% of the survey participants expect the US Dollar to cost less than 105.00 yen in three months
- Upcoming events: US Jobless Claims, US Revised Nonfarm Productivity, US Markit and ISM Manufacturing PMIs, US Construction Spending
Confidence among American shoppers improved unexpectedly in August, according to the Conference Board's monthly survey. The survey's Consumer Confidence Index increased to 101.1 points in the eight month of the year, compared to July's reading of 96.7, while market analysts anticipated a slighter acceleration to 97.1 in the reported month. Nevertheless, back in August 2015, the indicator was higher at 101.4 points. The survey is a closely-followed barometer of consumer attitudes towards business conditions, personal finances, jobs and short-term outlook. The data showed that 30% of respondents stated that business conditions were "good" in August, following July's 27.3%, whereas 18.4% stated conditions were "bad", unchanged from last month. 17.3% of respondents predicted an improvement in the next six months, compared to last month's 15.7%, while 11.1% predicted deterioration, down from July's 12.4%.
The share of respondents expecting their incomes to improve remained resilient; however, the outlook on the job market was mixed. Consumer sentiment among Americans remained in the positive territory for more than a year. A reading of 90 or above indicates economic expansion. The US economy is mostly driven by consumer spending, which accounts for about 70% of all economic growth.
US Manufacturing PMI and Revised Nonfarm Productivity
Today the US Manufacturing PMI is the main even to influence the USD/JPY currency pair. The Manufacturing PMI is released by both the Markit Economics and the Institute for Supply Management. The given PMI captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the Manufacturing PMI is an important indicator of business conditions and the overall economic condition in the US. Another event to pay attention to could be the US Nonfarm Productivity, which shows the output per hour of labor worked. Nonfarm Productivity indicates the overall business health in the US, which has an influence on the GDP.USD/JPY puts the down-trend to the test
The USD/JPY currency pair posted more gains on Wednesday, but they were limited by the eight-month resistance line at 103.55. Consequently, the American Dollar is now likely to undergo a correction, which could cause the given pair to slide back under the 103.00 major level, at least from the technical point of view. Aggregate technical studies, on the other hand, are unable to confirm the possibility of the negative outlook, as they keep giving mixed signals. Furthermore, there is a relatively large number of supports under the 103.00 mark, all having the potential to cause a bullish outburst if some demand is sufficient.Daily chart
The US Dollar continued to outperform the Japanese Yen, but with the rally easing since the pair approached the down-trend. The given resistance area is expected to trigger a sell-off, which could negate most of this week's current losses.
Hourly chart
Bulls retreated again, as 65% of traders hold long positions today (previously 66%). The buy and the sell order ratio is now equal to one.
Sentiment at Saxo Bank is virtually the same - 66% of the Denmark-based clients are currently holding long positions. Traders at OANDA are slightly less confident in Dollar's appreciation - as many as 62% of open positions are long. Using the data as a contrarian indicator, the sentiment implies a cheaper Dollar. There is little room for new buyers to enter the market, and if the bulls start closing positions on profit-taking, this could create a strong selling pressure.
Spreads (avg, pip) / Trading volume / Volatility
More than a half expect the exchange rate to fall below 105.00 yen
Slightly more than half of the surveyed (62%) now assume that the US Dollar is to cost less than 105.00 yen after a three month time. The most popular choice, however, implies that the Greenback is to cost between 108.00 and 109.50 yen in three months, selected by 17% of the voters. According to the votes collected between Aug 01 and Sep 01, the mean forecast for December 01 is 103.40. At the same time, 13% of the surveyed believe the Greenback could cost either between 103.50 and 105.00 yen or even more than 109.50 yen in three months.