- The portion of buy orders edged down to 45%
- 72% of all open positions are long
- The weekly PP at 102.69 represents immediate resistance
- Support is at 101.96
- 52% of the survey participants expect the US Dollar to cost less than 109.50 yen in three months
- Upcoming events: US Final GDP, US CB Consumer Confidence, Japanese Retail Sales, FOMC Member Powell Speech
Activity in the US services sector remained tepid in June, suggesting that the economy's underlying rate of growth remains lowly and that a rate hike may not be on the cards too soon. In a report, market research group Markit said that its flash services purchasing managers' index remained unchanged at 51.3 in June for the second month, falling short of expectations for a rise to a reading of 51.9. Although it remained above the 50.0 mark that separates contraction from expansion, it was well below the long-run survey average of 55.6.
Meanwhile, an increase in the amount of goods flowing into the US in May likely reduced the extent to which trade will boost economic growth in the second quarter. A separate research showed that the deficit on trade with goods widened to $60.6 billion in May, compared to a $59.4 billion gap projected by analysts. Last month's reading follows a $57.5 billion trade shortfall in April, fresh numbers from the Department of Commerce reported. It turns out that exports were soft in May and imports rose. US exports inched down 0.5% to $119 billion. Imports increased 1.4% to $179.6 billion, the highest level so far this year. The rise in in-bound shipments largely reflected greater volumes of industrial supplies and consumer goods.
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.
US GDP Annualized, CB Consumer Confidence and Japanese Retail Trade
Once again all focus is on the US data, as there are no events of significance from the UK today. First event is the US GDP Annualized, which shows the monetary value of all goods, services and structures produced within a country in a given period of time. GDP Annualized is a gross measure of market activity because it indicates the pace at which a country's economy is growing or decreasing. Another important event is the US CB Consumer Confidence, which captures the level of confidence that individuals have in economic activity. A high level of consumer confidence stimulates economic expansion while a low level drives to economic downturn. Tonight the Japanese Retail Sales are also due. They capture the aggregate sales made through a business location (usually a store) in which the principal activity is the sale of merchandise and related services to the general public, for household or personal consumption. Consumer spending is a key important indicator for the Japanese economy.USD/JPY struggles to preserve the wedge pattern
The USD/JPY currency pair almost fully negated early Monday's bearish gap yesterday, managing to return within the borders of the broadening falling wedge pattern. Technically, from this point on only more bullish momentum should follow, but that still might not be the case, as technical indicators in all timeframes retain bearish signals. As a result, the support line of the wedge might be pierced again, leaving the Bollinger band and the monthly S3 circa 101.30 to act as the second strong demand area. A breach lower would imply for the Buck to reach the 100 yen level, unless the 50.0% Fibo at 100.72 causes a rebound.Daily chart
The USD/JPY currency pair appears to have entered a consolidation period ever since it slumped last Friday. The bottom target is still the 50.0% Fibo, while the down-trend is to limit any gains, now also bolstered by the 200-hour SMA. No substantial event is expected to cause a breakout in either direction today.
Hourly chart
Market sentiment remains unchanged over the day, as 72% of traders still hold long positions. The portion of buy orders, on the other hand, edged ten percentage points lower down to 45%.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 70% of positions opened by its clients are long. Similarly, 58% of positions opened by Saxo Bank traders are long as well, unchanged since Monday.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to fall below 109.50 yen
Slightly more than half of the surveyed (52%) now assume that the US Dollar is to cost less than 109.50 yen after three month time. The most popular choice, however, implies that the Greenback is to cost between 111.00 and 112.50 yen in three months, selected by 18% of the voters. According to the votes collected between May 28 and June 28, the mean forecast for Sep 28 is 108.77. At the same time, 14% of the surveyed believe the Greenback could cost between 106.50 and 108.00 yen in three months.