- The market is not biased towards any side at the moment: 51% of orders set to buy and 49% set to sell the Greenback
- USD/JPY easily surpassed 120
- USD/JPY is facing a formidable supply at 121 that guards this year's high near 122
- Upcoming events: US mortgage Applications, US Continuing Jobless Claims, US Initial Jobless Claims
The US economy grew at the strongest pace in more than a decade during the third quarter, bolstered by robust consumer spending and business investment. Gross domestic product, the broadest measure of goods and services produced across the economy, rose at a seasonally adjusted annual rate of 5.0% in the July-September period, the Commerce Department said. That was up from the second quarter's growth rate of 4.6% and the strongest pace since the third quarter of 2003. The agency last month had projected third-quarter GDP growth at 3.9%. While the rate of growth likely slowed in the final quarter, strengthening labour market and falling gasoline prices should provide the world's biggest economy with a boost in 2015 and keep the US central bank on path to start hiking interest rates by the middle of next year. Fed policy makers estimate GDP growth of 2.3% to 2.4% in 2014, and an acceleration next year to growth of 2.6% to 3%.
A separate reading on US durable goods orders unexpectedly slumped in November, largely owing to a weak demand for military and defence goods. The Commerce Department said that orders for long-lasting goods declined 0.7% last month, the third drop in the past four months. Much of the decrease was attributed to a sharp 8.1% fall in demand for defence-related goods. Excluding volatile transportation equipment, bookings slid 0.4%.
US economy expands 5% in Q3, strongest growth in 11 years
Following news-heavy Wednesday there are still a news events that can have a visible impact on USD/JPY. Today's main release concerns the health of the US labour market, namely the Initial Jobless Claims. However, it is hard to imagine the market stopping buying dollar even if there are more people seeking benefits than anticipated.
USD/JPY launches an attack on 121
At the first half of the year USD/JPY was trading almost completely flat, as it traded around the 102 level. However, during the second part of August the Greenback started to outperform the Japanese peer, heralding a revival of a major bullish trend.Daily chart
As it turned out, the supply at 120 did not manage to stop the advancement of the US Dollar. Accordingly, it is now a turn of the resistance around 121 (weekly and monthly R1) to test the strength of the present upward momentum. If this area is not breached in the nearest future, the bears will have an opportunity to push the price back to 118. Alternatively, the rate will be expected to re-challenge this year's peak just below 122.
Hourly chart
Long and short remain equally distributed
A similar situation is observed with the orders—51% set to buy and 49% set to sell the Greenback, signifying the market is not biased towards any side at the moment.
Spreads (avg,pip) / Trading volume / Volatility
Community expects Yen to appreciate towards 120
One of the proponents of a bullish scenario, aslamhammad, turned out to be right to expect positive US GDP numbers. He sees USD/JPY being near 2014 highs be the end of this week. In the meantime, rokasltu is skeptical regarding 120 being broken, reckoning the bulls will not be able to push the price far.