- Orders to buy the Buck are in a majority with 65% of the market
- There are more bulls than bears among SWFX traders, 58% and 42%, respectively
- 22% of traders see USD/JPY above 124.5 by mid-May
- Upcoming events: US Existing Home Sales Change, US Markit Services PMI, US Consumer Confidence, Fed's Yellen Testifies
Growth of business activity in the US manufacturing sector accelerated in February at the fastest pace since November, rebounding from the lowest level in a year in the preceding month. Markit's flash manufacturing PMI climbed to 54.3 in February, compared with the January's final reading of 53.9. The output sub-index picked up to 56 in the reported month from January's 55.7 final reading, marking the second straight monthly increase and highest reading since October, while the employment sub-index fell to 51.7 from the previous month's 53.4. It was the slowest rate of employment growth in the manufacturing sector since July. Input prices also fell for the second consecutive month.
This Tuesday Federal Reserve Chairwoman Janet Yellen testifies before the Congress, giving investors a chance to look for hints over when the central bank is likely to start hiking short-term interest rates. In the minutes from FOMC January meeting released last Wednesday, Fed policy makers appeared to be a bit less willing to lift rates than investors had expected. However, the meeting took place almost a month ago, before the release of January employment report that overshot expectations. Yet, the majority of market analysts still anticipate a lift-off of US rates in June.
Andrew Wilkinson, Chief Market Analyst at Interactive Brokers, said "the Japanese economy probably requires further stimulus from Bank of Japan, I guess the biggest question mark hanging there is: whether or not massive quantitative easing at the BoJ is actually working for the domestic economy?"Anticipate US Consumer Confidence
Today we are left only with US Existing Home Sales change; however, tomorrow we anticipate important data, such as US Markit Services PMI, US Consumer Confidence, and Fed's Yellen Testimony.
USD/JPY edged up on Friday
Andrew Wilkinson also mentioned: "We saw the Yen strengthening to around 117.5. We have seen great weakening or a resumption of that trend of weaker Yen as the weeks went on one heading towards 120 vs the dollar. Looks like if the market is getting back into that mode of expecting further stimulus, one would expect the Yen to continue weakening into 120s."
USD/JPY cross slightly added in value for the second day last Friday, after rebounding from the 55-day SMA. The Buck keeps rising today, but the pair is unlikely to go too high, as the US Existing Home Sales are expected to worsen. Thus, the closest resistance, which is represented by the weekly R1 at 119.50, might stop the pair from surging too much.
Daily chart
On the hourly chart the pair was seen surging higher after unsuccessful attempts to decline. Moreover, the Buck has reached a ten-day high today, as the technical indicators are mostly pointing north in both the hourly and the daily time-frames. In spite of the weaker expected data later today, the USD/JPY cross is unlikely to wander far beyond the Friday's close.
Hourly chart
Bulls prevail among traders
There are more bulls than bears among SWFX traders, accounting for 60% and 40% of the market, respectively. At the same time, the number of buy orders is even higher, accounting 65% of the total.
OANDA traders are also optimistic with respect to the Greenback, since 61% of open positions are long. In the meantime, the attitude of the SAXO Bank traders stays neutral, being that 52% of open positions are short and the remaining 47% are long.