- 75% of all pending orders are to acquire the US currency
- 56% of traders are long the US Dollar
- The weekly S1 at 105.11 represents immediate resistance
- Support is around 104.20
- 55% of the survey participants expect the US Dollar to cost less than 108.00 yen in three months
- Upcoming events: US Durable and Core Durable Goods Orders, US Pending Home Sales, US Crude Oil Inventories, FOMC Statement and Federal Funds Rate
New US single-family home sales rose more than expected in June, fresh figures from the US Census Bureau showed on Tuesday. Sales of newly built homes grew 3.5% to a seasonally adjusted rate of 592,000 units during the reported month, posting the strongest reading since February 2008 and surpassing market analysts' expectations for an increase to 560,000 units. In the meantime, the previous month's sales pace was revised up to 572,000 from the originally reported 551,000 units. The housing market is being underpinned by the tightening labor market, which is starting to lift wages, as well as very low mortgage rates.
Other data released on Tuesday showed that the mood of shoppers across the United States worsened less than expected in the seventh month of the year, as the Conference Board Consumer Confidence Index dropped to 97.3 points in July, whereas economic desks predicted a steeper deceleration to 95.6 in the reported month. Meanwhile, last month's figure was revised down to 97.4 from the prior reading of 98.0 points, which was the highest since January. Furthermore, it appeared that Britain's recent decision to leave the European Union did not have any significant impact on American consumers.
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.
FOMC Statement to have the most impact
Today there is a number of US fundamentals to influence the USD/JPY pair's performance, such as the US Durable and Core Durable Goods Orders. The Durable Goods Orders measure the cost of orders received by manufacturers for durable goods, which means goods planned to last for three years or more, such as motor vehicles and appliances. As those durable products often involve large investments, they are sensitive to the US economic situation. The Core Durable Goods Orders, however, exclude the transport sector. However, the most impact should be from the Federal Funds Rate, but it is expected to remain unchanged, with attention turning to the tone of the FOMC statement, which is to ultimately drive the USD pairs today.USD/JPY attempts to post gains on BoJ stimulus hopes
The USD/JPY currency pair edged lower on Tuesday, but, as expected, was unable to fall below the 104.00 major level, due to demand around 104.15 being sufficient to limit the losses. Earlier today the Yen weakened amid rumors of the BoJ possibly announcing more stimulus during its meeting later this week, allowing the Greenback to take the upper hand. The key resistance is located around 106.40, represented by the weekly PP, the 55-day SMA and the 38.20% Fibo, but it is uncertain whether the Buck will be able to maintain trade even above the 105.00 level, despite technical indicators retaining bullish signs. A dovish FOMC statement could cause the pair to plunge further today.The USD/JPY pair somewhat continued to trade within the borders of the descending channel yesterday, providing some confirmation of the lower boundary. However, the Buck attempted to breach the resistance trend-line earlier today and further attempts are expected to be made, which are to render the pattern to be broken.
Hourly chart
Now 56% of traders are long the US Dollar (previously 55%), whereas 75% of all pending orders are to acquire the US currency, up from 65%.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 63% of positions opened by its clients are long. Similarly, 53% of positions opened by Saxo Bank traders are long as well, compared to 55% on Tuesday.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to fall below 108.00 yen
Exactly half of the surveyed (55%) now assume that the US Dollar is to cost less than 108.00 yen after three month time. The most popular choice, however, implies that the Greenback is to cost between 108.00 and 109.50 yen in three months, selected by 23% of the voters. According to the votes collected between June 27 and July 27, the mean forecast for Oct 27 is 106.12. At the same time, 12% of the surveyed believe the Greenback could cost either between 99.00 and 100.50 or between 100.50 and 102.00 yen in three months.