- The number of orders to purchase the US Dollar edged down 77 to 45%
- 71% of traders hold long positions
- The weekly PP and the monthly S1 at 107.04 represent immediate resistance
- Support is at 106.65
- 50% of the survey participants expect the US Dollar to cost more than 114 yen in three months
- Upcoming events: US Retail and Core Retail Sales, US Import Prices
Friday and the weekend were rather favourable for the US Dollar, being that it appreciated against most major currencies. The largest gain was registered against the weakened Sterling, namely 1.42%, while mild losses were seen against the Aussie (0.79%), the Kiwi (0.70%), the Euro (0.58%) and the Loonie (0.46%). Meanwhile, the USD/CHF remained relatively unchanged, having edged 0.03% higher, while the only loss of 0.12% was detected against the Japanese Yen.
The survey indicates that consumers became more concerned about the US economy. Their rating of government economic policy suddenly dropped to the weakest level in almost two years. The recent data shows the growing gap between the most favourable assessments of Current Economic Conditions since July 2005, as well as renewed downward trend of the Expectations Index, which fell by a rather modest 8.6% from the January 2015 peak. Also, the University of Michigan's preliminary consumer sentiment index managed to advance, and was higher than expectation for the current month, but still went down compared to the preceding month's level. The index was 94.3, outperforming the estimates for 94, but still down from 94.7 mark. Moreover, consumers hint that they might increase their savings and delay spending if the pace of job creation does not accelerates. Also, they supposes that inflation will have a minimal impact on their real incomes since long-run inflation expectations plunged 0.2 percentage points to 2.3%, to its record low.
In the meantime, consumers do not think the economy is as strong as it was last year period as well as do not anticipate the economy will show the same financial health in the year ahead as they anticipated a year ago.
Vatsal Srivastava, director at the Blackwater Consulting, explained why the US Dollar advanced against the Yen last week. He said there was nothing fundamentally driving USD/JPY on Monday, but one of the key drivers was the falling oil prices, which was actually boosting the Yen; in analyst's opinion, as there was an addition cause for more QQE. Vatsal Srivastava also mentioned 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 summed up.
No USD/JPY fundamental drivers on Monday
There are no important releases on Monday, but on Tuesday a number of data could influence the USD/JPY pair. They measure the total receipts of retail stores. Monthly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. The Core Retail sales, however, exclude the automobile sector. Furthermore, the US Import Prices are due. They are released by the US Department of Labor, which informs the changes in the price of imported products into the US. The higher the cost of imported goods, the stronger the effect they will have on inflation, redunding in a higher probability of a rate rise.USD/JPY dives, as risk-off sentiment preponderates
As was anticipated the USD/JPY currency pair kept gravitating towards the 107.00 major level on Friday, unable to close far away from that area and, as a result, remained relatively unchanged. However, the Japanese Yen received a boost earlier, with risk aversion returning to the markets and driving the exchange rate significantly lower. There is a possibility of the 38.20% Fibo at 106.65 limiting the losses, despite volatility stretching out beyond 106.00. Nevertheless, technical indicators are giving bearish signals, bolstering the possibility of the negative outcome, but the May low at 105.55 is expected to hold.Daily chart
Even though the USD/JPY pair breached the down-trend, it still failed to reach the 108.00 target, where more selling was expected to occur. The US Dollar is struggling to climb over the 107.00 major level now, with the 38.20% Fibo no longer being sufficient to remain elevated. As a result, more weakness could follow..
Hourly chart
There are 71% of traders holding long positions today, unchanged since Friday. At the same time, the number of orders to purchase the US Dollar edged lower, namely from 77 to 45%.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 67% of positions opened by its clients are long. Similarly, 58% of positions opened by Saxo Bank traders are long as well, down from 59% on Friday.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to rise above 114 yen
Exactly half of the surveyed (50%) now assume that the US Dollar is to cost more than 114.00 yen after three month time. The most popular choice implies that the Greenback is to cost somewhere between 114.00 and 115.50 yen in three months, selected by exactly a fifth (20%) of the voters. According to the votes collected between May 13 and June 13, the mean forecast for Sep 13 is 112.26. At the same time, 17% of the surveyed believe the Greenback could cost more than 117 yen in three months.