- 61% of all pending orders are to buy the Buck
- 64% of traders are long the US Dollar
- The monthly S1 and the 50% Fibo form resistance around 100.80
- The closest support rests around 100.00
- Upcoming events: US Markit Services PMI, US CB Consumer Confidence, FOMC Member Fischer Speech
The number of Americans filing for unemployment benefits fell sharply last week, official figures revealed on Thursday. According to the US Department of Labor, initial claims for jobless benefits dropped 8,000 to a seasonally adjusted rate of 252,000 in the week ended September 16, touching the lowest level since mid-July. Meanwhile, market analysts expected initial jobless claims to rise to 261,000 last week from the preceding week's 260,000. Filings for US unemployment benefits remained below the 300,000 level for the 81st consecutive week, the longest streak since 1973. The four-week moving average of initial claims, considered a better measure of labor market trends, declined 2,250 to 258,500 last week. The US Dollar Index, which measures its strength against a trade-weighted basket of six major currencies, fell 0.45% to 95.03, the lowest level since September 12, despite upbeat data.
Other data released by the National Association of Realtors (NAR) showed sales of previously owned US homes unexpectedly declined to a seasonally adjusted annual rate of 5.33 million units in August, following the previous month's 5.38 million unit pace and falling behind the 5.45 million unit rate market forecast. The drop was mainly driven by a shortage of properties for sale as it lifted home prices higher.
US Services PMI and the CB Consumer Confidence
Tuesday is also rather quiet in terms of fundamental data, having only to relevant events to influence the USD/JPY pair's performance, namely the US Markit Services PMI and the CB Consumer Confidence. The Services PMI captures business conditions in the services sector. As the services sector dominates a large part of total GDP, the services PMI is an important indicator of the overall economic condition in the US. A result above 50 signals is bullish for the USD, whereas a result below 50 is seen as bearish. The CB Consumer Confidence 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. Generally, a high reading is also positive for the USD, while a low reading is negative.USD/JPY gravitates towards 50% Fibo
Investors sold the American Dollar on Monday, due to uncertainty emitting from the US political debates that day. As a result, the USD/JPY currency pair crossed the nearest demand area, represented by the monthly S1 and the 50% Fibo. However, a significant drop lower would still be an achievement, as it would imply a full-scale breach of the 100.00 psychological level. In turn, the 100.00 mark is reinforced by the weekly S1 and the Bollinger band, also indicating that a fall deeper down is highly improbable today. The base case scenario is a rally, but it is uncertain whether the Buck will be able to climb over the 100.75 level, with technical indicators unable to confirm the bullish scenario.Daily chart
After last Wednesday's slump the USD/JPY pair appears to have entered a consolidation phase, with the 100.00 level representing the lower border and the 101.30 representing the upper one. Trade is expected to remain within this range until the US Durable and Core Durable Goods Orders are released tomorrow.
Hourly chart
Today 64% of traders are long the US Dollar (previously 63%), whereas 61% of all pending orders are to buy the Buck (down from 63%).
There has been an increase in the number of long positions at other brokers as well. Right now 70% of OANDA clients are bulls, up from 69% recorded on Monday. Saxo Bank clients, however, remained equally bullish as on Monday, being that the portion of longs still takes up 69% of the market.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between August 27 and September 27, traders expect the US Dollar to appreciate to 106.25 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 81% of all forecasts fall above 102 yen, which is the current spot price. By far the most popular interval is 109.50-111.00, chosen by 25% of all the surveyed, compared to popularity of the 105.00-106.50, 106.50-108.00 and 108.00-109.50 intervals.