- The number of sell orders inched up from 51 to 54%.
- 69% of all open positions are short
- The monthly S2 around 117.63 is the nearest resistance
- Immediate support is at 117.28, represented by the weekly PP
- 58% of the survey participants expect the US Dollar to cost less than 120.00 yen in three months
- Upcoming events today: US NAHB Housing Market Index, US Building Permits, US CPI and Core CPI, US Housing Starts, US Crude Oil Inventories
On Monday the US Dollar managed to appreciate against most major peers, only failing to edge higher versus the Aussie. The Greenback gained the most versus the Swiss Franc, adding 0.41%, while the USD/JPY inched 0.29% higher. The US currency struggled to advance versus the Sterling, as the Cable surged only 0.09%; at the same time, the AUD/USD dropped 0.05% lower, remaining relatively unchanged.
American shoppers curbed their spending last month, fuelling concerns about the momentum in consumer spending heading into 2016. Sales at retailers declined 0.1% from the previous month to a seasonally adjusted $448.1 billion in December, according to the Commerce Department. Retail sales rose 0.4% in November, compared with an initially reported 0.2% gain. From a year earlier, sales grew just 2.1% in 2015, marking the slowest increase in the six-year expansion. Consumer spending is a key catalyst of the US economic growth, representing more than two-thirds of economic output. Household consumption has helped the world's number one economy grow in recent quarters despite a stronger Dollar and weak demand overseas, which have hit US exporters.
A separate report showed US producer prices declined in December, underscoring persistently low inflation. The producer price index, which measures the prices companies receive for goods and services, dropped 0.2% in December, the Labor Department reported. Excluding volatile food and energy categories, core prices inched up 0.1%. Overall producer prices were down 1.0% in December from a year earlier, the 11th consecutive year-over-year decline. Core prices increased 0.3% from a year earlier.
Vatsal Srivastava, director at the Blackwater Consulting, explains why the US Dollar is a advancing against the Yen this week. Even though he says that there was nothing fundamentally driving the USD/JPY on Monday, one of the key drivers is the falling oil prices, which is actually boosting the Yen, in his opinion, as there is an addition cause for more QQE. Vatsal Srivastava also mentions that "it is going to be a hard economic ride ahead and there seems to be no light on the horizon for Japan as of now". "Lets hope for the best," he added.
US NAHB Housing Market Index is the only relevant event today
The only possible even to further influence the USD crosses is the NAHB Housing Market Index, however, the oil prices seem to be having a stronger impact than other fundamental data. The NAHB Housing Market Index is released by the National Association of Home Builders. It presents home sales and expected home buildings in the future indicating housing market trend in the United States. The growth rate of the housing market affects the USD volatility. Nevertheless, this particular release is unlikely to cause strong volatility in USD crosses.USD/JPY ignores risk-off sentiment
On Monday the USD/JPY currency pair managed to partially recover last Friday's losses, with trade closing at 117.31, just on top of the weekly PP. The pivot point is now providing immediate support, pushing the Greenback higher against the Yen, while the monthly S2 at 117.63 acts as the closest resistance. Although a slowdown in Chinese GDP failed to have an instant effect on the pair and strengthen the JPY, it did spark the risk aversion. As a result, the Buck could erase current gains and fall to 117.00, as technical indicators suggest with their bearish signals.Daily chart
The US Dollar experienced a corrective rally on Monday, edging closer to the 200-hour SMA. The given SMA was expected to provide resistance and cause the pair to bounce back, however, that is not the case, as the resistance was pierced. Nonetheless, gains are unlikely to extend far beyond the 118.00 level, with a possibility of today's gains getting erased.
Hourly chart
Bears dominate the market
Other market participants, such as OANDA and SAXO Group, have a completely different sentiment, as the majority of their traders hold long positions. Among SAXO Bank, 62% of traders are still long the US Dollar, whereas 64% of all positions at OANDA are also long (previously 65%).
Spreads (avg, pip) / Trading volume / Volatility
More than a half expect the exchange rate to fall under 120 yen
The largest half of the survey participants (58%) expect the US Dollar to cost less than 120.00 yen in three months. The most popular choice is the 114.00-115.50 price interval, selected by 33% of the voters; however, according to the votes collected between Dec 19 and Jan 19, the mean forecast for Apr 19 is 118.69. At the same time, 12% of the surveyed believe the Greenback could fall either in the 120.00-121.50 or 123.00-124.50 price intervals after a three month period.