- There is no significant difference neither between the open positions (-4 pp) nor between the pending orders (-6 pp)
- The current sell-off may extend down to the up-trend at 118
- Fingraphs.com: USD/JPY to trade in the 1.23-1.25 region in the next few months
- FXPro: USD/JPY eyes 135
- Upcoming events: US Initial Jobless Claims, Chicago PMI, Pending Home Sales
US consumer confidence edged up in December, as households became more optimistic about the domestic economy amid falling oil prices, which make families feel more confident about their finances, as well as ameliorating jobs market, which is set to provide the most job vacancies in 15 years. The consumer confidence index edged up to 92.6 points in December, while analysts had expected 94 points, and following a revised 91.0 points from 88.7 in November, the Conference Board reported. The indicator hit a recovery high at 94.1 in October. Consumer expectations for economic activity over the next six months came in at 88.5 following November's revised 89.3, while the present situation index soared to 98.6 from a revised 93.7 in the previous month. The Conference Board's present situation index is now at the highest level since February 2008.
Consumers are the main driver of economic growth in the world's number one economy, particularly in the final quarter of the year when households buy gifts as well as other items during the Christmas holiday season. Household expenditures account for around 70% of total economic output. Economists believe that if low oil prices are sustained for a few months, it should result in greater consumption.
Jobless claims to edge up
The focus of the financial world should now be shifting to the state of the labour market in the United States, as the Department of Labour will be publishing the number of initial jobless claims. Meanwhile, on Friday the Institute for Supply Management is going to tell whether the growth rate of the manufacturing sector is accelerating.
USD/JPY retreats from 121
Simon Smith, Chief Economist at FXPro, is expecting the Yen to weaken next year. He does not rule out a possibility of USD/JPY surging up to 135, reasoning that the Japanese government is going to push ahead with the policy measures to prop up economic growth.
Daily chart
USD/JPY took a major hit yesterday, plummeting more than 100 pips from the monthly R1. Regardless of the daily and weekly technical indicators being bullish, the US Dollar is vulnerable to continuation of the sell-off to 118. There the pair will already be underpinned by the three-month up-trend and 23.6% Fibo of the Oct-Dec rally and will thus be in a good position to re-challenge this year's highest point at 122.
Hourly chart
Sentiment still different across the brokers
At the moment there is no significant difference neither between the open positions (-4 pp) nor between the pending orders (-6 pp). This suggests the traders are undecided regarding the pair and the nearby supports and resistances are of equal strength.
However, according to the data compiled by OANDA and SAXO Bank, there is a large skew in favour of the long positions. In the first case the share of bulls is estimated to be at 60%. Even a more distinct advantage is in the second case - 81% of open positions are long.
Spreads (avg, pip) / Trading volume / Volatility
Most forecasts above 120
Results of a survey among the FX Community members reveals that an overwhelming majority (83%) of traders who shared their opinion expect USD/JPY to close this week in green. The consensus forecast for Jan 2 is 120.5, but only 16% of respondents voted for the 120.9/2 interval, the same amount of votes as for the 122.2/121.6 range. According to the community, the most likely ranges for USD/JPY to end this week in are 121.6/120.9 and 120.2/119.5 - 18% of participants voted for them.