- Bulls take up 60% of the market
- The share of purchase orders increased from 29 to 51%
- The weekly S1 at 101.37 is the nearest support
- Weekly and monthly PPs, along with the 20 and 55-day SMAs, form resistance around 102.40
- Upcoming events: US Building Permits, US Housing Starts
Confidence among US homebuilders improved in the ninth month of the year, official data revealed on Monday. The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) jumped to 65 in September, the highest reading since October last year, whereas market analysts expected the Index to come in at 60 points. The August reading was revised down to 59 from the originally reported reading of 60. Any reading above 50 indicates an overall positive outlook. The Index was seen mostly at 58 points, rising to 61 in January. According to the report, current sales advanced to 71 in September from August's 65, the fastest pace in nearly nine years, whereas sales expectations in the next six months climbed to 71 from the preceding month's 64. In the meantime, buyer traffic rose to 48 from last month's 44 points, remaining below the 50-point level.
In regional terms, on a three-month moving average basis, homebuilder confidence in both the Northeast and South increased one point to 42 and 64 points, respectively, as well as it improved in the West to 73 from last month's 69 points. The Index found builder sentiment held steady at 55 in the Midwest.
No events until Tuesday
Today attention should be paid to the US Building Permits and Housing Starts, due at 12:30 pm GMT. The Building Permits are released by the US Census Bureau and show the number of permits for new construction projects. It implies the movement of corporate investments (US economic development). It tends to cause some volatility to the USD. Normally, the more growing number of permits, the more positive (or bullish) for the USD. The Housing Starts, on the other hand, is an annualised number of new residential buildings that have already begun construction during the preceding month.USD/JPY remains on the back foot
The US Dollar behaved according to expectations on Monday, having fallen back under the 102.00 major level. Overall, the USD/JPY currency pair has been trading in a down-trend for almost a year now, recently putting the descending channel's upper border to the test more frequently. With the resistance being strong, formed by the weekly and the monthly PPs, as well as the trend-line, the 20 and the 55-day SMAs, an upside development is unlikely. Instead, focus should be on the weekly S1 at 101.37, which is the only obstacle on the Greenback's path towards a tough support area around 100.60.Daily chart
Moreover, on the hourly chart things also occurred as was expected, with the exchange rate putting the one-month up-trend to the test. The USD/JPY currency pair found support at the given trend-line and, technically, should rebound once more, opposed to the outlook of the daily chart..
Hourly chart
Bulls lost some numbers over the day, as they now take up 60% of the market, compared to 70% previously. As for the purchase orders, their share once again increased, namely from 29 to 51%.
There has been an increase in the number of long positions at other brokers as well. Right now 64% of OANDA clients are bulls, down from 66% recorded on Monday. Saxo Bank clients, however, are more bullish than on Monday, being that the portion of longs increased from 65 to 67%.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between August 20 and September 20, traders expect the US Dollar to appreciate to 105.29 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 78% of all forecasts fall above 102 yen, which is the current spot price. By far the most popular interval is 109.50-111.00, chosen by 16% of all the surveyed, compared to popularity of the 102.00-103.50, 103.50-105.00, 106.50-108.00 and 108.00-109.50 intervals.