- The portion of buy orders dropped down from 54 to 40%
- 61% of traders are long the Buck today
- Resistance rests at 101.60
- The weekly PP at 100.55 represents immediate support
- 54% of the survey participants expect the US Dollar to cost less than 108.00 yen in three months
- Upcoming events: Empire State Manufacturing Index, NAHB Housing Market Index, US Building Permits, US CPI and Core CPI, US Housing Starts, US Capacity Utilization Rate, US Industrial Production
Sales at US retailers unexpectedly fell in July, official data revealed on Friday. According to the Department of Commerce, retail sales came at a seasonally adjusted 0.0% in the reported month, compared to the previous month's upwardly revised figure of 0.8%, while economic desks pencilled in a deceleration to 0.4%. Furthermore, core retail sales, excluding automobiles, dropped a seasonally adjusted 0.3% in the seventh month of the year, whereas the preceding month's gain was revised up to 0.9% from the originally reported increase of 0.7%, whereas analysts expected a decrease to 0.2%. Separate reported released by the Department of Labor on the same day showed that US producer prices returned to contraction in July after three months of consecutive growth, as the Producer Price Index dropped 0.2% on an annual basis in the reported month, following the 0.3% rise registered in July. Month-over-month, US factory gate inflation declined 0.4% in July, compared to the 0.5% gain seen in the preceding month, while market analysts anticipated a fall to 0.1% in the reported period.
Meanwhile, the University of Michigan Consumer Sentiment survey released on Friday showed that mood among US shoppers improved in August, as it preliminary Consumer Confidence Index rose to 90.4, compared to July's final print of 90.0, while markets predicted the Index to come in at 91.5 in the reported period.
NAHB Housing Market and Empire State Manufacturing Indexes are the only relevant events this Monday
As on most Mondays, there are not many fundamental events scheduled for today. In fact, there are only two events that could have an impact on the USD/JPY pair's performance, namely the NAHB Housing Market Index and the Empire State Manufacturing Index. The NAHB Housing Market Index presents home sales and expected home building in the future, indicating housing market trend in the United States. The growth rate of the housing market affects the USD volatility. The Empire State Manufacturing Index gauges business conditions for New York Manufacturers. Generally speaking, a positive result indicates bullish for the US Dollar, while a negative result shows poor growth of the Buck.USD/JPY struggles to remain above 101.00
The Yen was outperforming the US Dollar through most of Friday, when a set of poor US fundamental data only added more oil to the flame. As a result, the USD/JPY pair almost completely erased preceding gains, managing to remain above the 101.00 major level. Demand at the 101.00 mark remains strong and should prevent the Greenback from falling deeper down today, despite technical indicators retaining bearish signals in all timeframes. However, a substantial rally is also unlikely, as the nearest resistance lies not far from today's opening price, namely at 101.60. On the other hand, in case the bearish momentum prevails, the weekly S1 at 100.55 is the nearest support.Daily chart
A rather sharp drop on Friday caused the US Dollar to put the two-week trend-line to the test, finally managing to find support and rebound. The hourly chart, however, suggests that a drop below 101.00 is unlikely.
Hourly chart
There are 61% of traders being long the Buck today (previously 62%), whereas the portion of buy orders dropped down from 54 to 40%.
Sentiment at Saxo Bank is virtually the same - 69% of the Denmark-based clients are currently holding long positions. Traders at OANDA are even more confident in Dollar's appreciation - as many as 70% of open positions are long. Using the data as a contrarian indicator, the sentiment implies a cheaper Dollar. There is little room for new buyers to enter the market, and if the bulls start closing positions on profit-taking, this could create a strong selling pressure.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to fall below 108.00 yen
Slightly more than half of the surveyed (54%) now assume that the US Dollar is to cost less than 108.00 yen after a three month time. The most popular choices, however, imply that the Greenback is to cost either between 109.50 and 111.00 yen or even more than 112.50 yen in three months, both selected by 17% of the voters. According to the votes collected between July 15 and August 15, the mean forecast for November 15 is 106.01. At the same time, 14% of the surveyed believe the Greenback could cost somewhere between 99 and 100.50 yen in three months.