- 52% of commands are now to purchase the Dollar and the remaining 48% are to sell
- The share of bulls returned to its Tuesday's level of 72%
- 18% of traders expect the US Dollar to 123.00-124.50 yen after a three-month period
- Nearest resistance rests at 120.11, represented by the monthly PP, while closest support lies at 119.88, the 55-day SMA
- Upcoming events: US Initial and Continuing Jobless Claims, US Markit Manufacturing PMI, US New Home Sales Change
Sales of previously owned homes surged to the highest level in 18 months last month, as more homes came to the market, a sign the housing market is regaining momentum after a tepid beginning to the year. If such a fast pace of sales growth is maintained, 2015 would become the best year for existing home sales in almost a decade. Yet lacklustre retail sales and soft factory data indicated the growth rebound are likely to be insufficient to convince the Fed to hike interest rates in June.
Existing-home sales soared 6.1% last month from February to a seasonally adjusted annual rate of 5.19 million, according to the National Association of Realtors. That was the highest level since September 2013. Measured on an annual basis, March sales jumped 10.4%. The increase in March sales follows two sluggish months amid cold winter weather. The February sales pace was 4.89 million, while in January it was 4.82 million. However, the latest data suggest the combination of low mortgage rates, steady job creation as well as pent-up demand could result in full-year sales reaching prerecession levels. The median sale price for a previously owned home soared 7.8% from the previous year to $212,100 in March, NAR said. Sales of existing homes make up around 90% of all home purchases in the US.
Craig Erlam, Senior Market Analyst at OANDA, commenting on the prospects of the Fed raising interest rates this year, said that there is no real difference between the Fed raising rates either in June or in September. In his opinion September just seems more likely, because it gives the Fed more time to prepare for the hike. Craig also does not see the immediate necessity for a rate hike in September, but thinks that "there is just a number of policymakers who want to test the water with the first hike, see how the markets react, how economy holds up."
US Jobless Claims
There is no data on the Japanese economy due today. Nevertheless, a number of releases on the US economy are scheduled for today. The main event is the US Jobless Claims, where less people are expected to apply for the benefit, meaning that the overall economic health in the US is improving. However, the data might disappoint, amid recent signs of the US economy weakness, despite yesterday's strong Home Sales data.
Marcel Thieliant, economist from Capital Economics, forecasts USD/JPY to be at 130.00 by the end of the second quarter. The analyst commented that he expects the BoJ to step up the pace of easing at the end of this month. "This is obviously not what other economists expect, if that happens, we will probably see a strong drop in the Yen against the Dollar and against other major currencies," he said.
USD/JPY attempts to reach 120
On Wednesday, the US Dollar appreciated against the Yen amid substantial improvements in the US fundamentals. However, the USD/JPY pair failed to reach the initial resistance at 120.11. Today the Greenback is likely to edge down, unless the US data surprise again to the upside. The 20-day SMA lacks the strength to stop the decline, thus a fall towards the weekly PP is the most probable outcome. Nevertheless, we should not rule out the possibility of a surge towards 120.26. The technical studies retain mixed signals, unable to bolster either scenario.
Daily chart
After falling through the previous week, the USD/JPY appears to have regained momentum and formed an ascending channel. Both, the support and resistance trend-lines have held the pair within its borders. Latest candles are seen to have touched the lower trend-line, thus rebounding afterwards. The pattern suggests that the growth will prolong; however, the support trend-line might be breached after the fundamental data later today.
Hourly chart
Bullish sentiment slightly stronger
Traders' outlook towards the Buck remains positive, as the share of bulls returned to its Tuesday's level of 72%. The gap between buy and sell orders narrowed, as 52% of commands are now to purchase the Dollar and the remaining 48% are to sell.
OANDA's traders have a less positive outlook towards the Greenback today, with the share of longs account for 62% of the market. SAXO Group traders' sentiment weakened as well, as only 66% of traders are long the Dollar (previously 70%).
Spreads (avg, pip) / Trading volume / Volatility
18% of traders expect the US Dollar to 123.00-124.50 yen after a three-month period
The mean forecast for July 23 is 121.34. The majority of traders (63%) expect the Greenback to cost more than 120 yen in three months. The most popular choice was 123.00-124.50, selected by 18% of survey participants, while the second place was taken by 121.50-123.00, voted for by 16% of traders.
Dukascopy traders became more bearish on USD/JPY currency pair, as now almost 57% believe in negative development.
TaoMarx, one of the survey participants, suggests the USD/JPY pair will advance. He commented on his choice, saying that "the pair is showing a consolidation zone on the four-hour chart, but looking bullish on the daily, but as it loses the support, a trend reversal maybe forming." A trader with a bearish perspective, Daytrader21, assumes the USD/JPY will suffer losses, as it is heading towards retesting the 118.00 and then 116.00 levels before another leg higher.