- Orders to buy the Buck are in a majority with 67% of the market
- Distribution between the long and short positions in the SWFX marketplace is also prevailing with 62%
- 16% of traders see USD/JPY above 124.5 by mid-May
- Upcoming events: US NAHB Housing Market Index
As gas prices continue to decline, US consumers find themselves with extra cash in their pockets to spend this year. According to a report from investment banking company Jefferies, lower gas prices could result in an additional $120 billion to $200 billion for US households, translating into $950 per driver. Given consumer spending accounts for around 70% of the US economic activity, the world's number one economy's growth is likely to substantially accelerate this year. Visa's report revealed that half of savings from cheap gas would be put away, while one quarter will be used to pay down debt. Thus, US consumers will be left with around $50 billion to spend on discretionary items such as clothing and food. However, it is estimated that the increased spending will not be fully underway until the second half of 2015. Yet, retailers of all sorts can expect a bump in sales.
America's economy expanded 2.6% in the final three months of the year, much lower than the expected 3.3% growth. Overall for 2014, US gross domestic product rose 2.4%, the highest level in four years, according to the Commerce Department. Economists predict the U.S. economy will grow faster in 2015 on the back of sturdy consumer spending. The US growth this year is expected to be a lot closer to 3%. Meanwhile, the US financial markets were closed on Monday for a public holiday.
Yasunari Ueno, Chief Market Economist at Mizuho Securities, said that:"The preliminary gross domestic product release for the fourth quarter confirms the economy is past the worst, but it's not easy to be optimistic about the path of growth from here".Quiet fundamental background
Today we are expecting the US NAHB Housing Market Index data to be slightly better than in the previous month. Hence, the Greenback is likely to gain value versus the Yen if the data is indeed going to be better.
USD/JPY rebounds after weekend's loss
Glenn Levine, Senior Economist at Moody's Analytic, said that Japan's corporate sector is enjoying record profit levels and sits atop a mountain of cash, with export-facing firms, in particular, benefiting from better export sales linked to the cheaper Yen, yet, so far firms have been reluctant to deploy any of this cash and invest in additional capacity.
USD/JPY has seen limited movement, and the pair is currently trading in the range constrained by monthly R1 and PP at 120.21 and 118.03, respectively. Nevertheless, this week the cross has regained momentum, and the US Dollar is steadily edging higher. However, the pair seems to have stopped in face of the 55-day SMA at 118.81, where it has a chance of meeting resistance, unless outstanding US data release pushes the price higher.
Daily chart
The USD/JPY cross is on the bullish path, with insignificant fluctuations on the way. Overall, the movements are following an uptrend pattern, as the Greenback keeps strengthening. The pair has already penetrated all of the closest resistance levels, whereas the nearest is now higher, represented by the weekly PP and the 100-day SMA.
Hourly chart
Bulls withstand the sell-off
The distribution between the long and short positions in the SWFX marketplace skewed in favour of the former, with 62% of positions now being long. At the same time, there are more orders to buy the Buck, accounting for 67% of the market.
OANDA traders are even more optimistic with respect to the Greenback, since 65% of open positions are long (63% on Monday). In the meantime, the attitude of the SAXO Bank traders stays neutral, being that 51% of open positions are short and the remaining 49% are long.