- The portion of buy rose from 53 to 54%
- 61% of all open positions are long today
- The nearest resistance is located at 103.88
- The closest support rests at 103.74
- Upcoming events: US Building Permits, US Housing Starts, US Crude Oil Inventories, US Beige Book
US consumer prices rose most since April last month, driven by a surge in gasoline and rental prices. On Tuesday, the US Department of Labor said its Consumer Price Index advanced 0.3% in September, following the preceding month's gain of 0.2% and meeting analysts' expectations. On an annual basis, the CPI climbed 1.5%, posting the biggest year-over-year rise since October 2014 and surpassing August's 1.1% increase.
Meanwhile, the so-called core CPI, which excludes food and energy prices, rose 0.1% month-over-month and 2.2% year-over-year in the same month after climbing 0.3% on a monthly basis and 2.3% on a yearly basis in August. Notwithstanding, today's disappointing core CPI data is unlikely to change the prospect of a Fed rate hike in December. The September increase was mainly driven by higher gasoline prices that surged 5.8% after falling 0.9% in August. The price of food remained unchanged for the fifth consecutive month in September. As to the core CPI, owners' equivalent rent of primary residence advanced 0.4%, following the 0.3% rise in August, while medical care costs grew 0.2%, compared to the preceding month's 1.0% hike. Hospital services prices held steady in September, whereas prescription drug costs climbed 0.8%.
US CPI and NAHB Housing Market Index
From the US side the Building Permits are due. They show the number of permits for new construction projects. It implies the movement of corporate investments (US economic development). It tends to cause some volatility to the USD. At the same time, the Housing Starts are due, which show the number of new residential buildings that began construction during the preceding month. Finally, the US Beige Book is due later today. It reports on the current US economic situation. Through interviews with key business contacts, economists, market experts, and other sources are gathered by each of the 12 Federal Reserve Districts. The survey gives a picture of the overall US economic growth. An optimistic view of those authorities is considered as positive for the USD, whereas a pessimistic view is considered as negative.USD/JPY remains on the back foot
Relatively weak US inflation data yesterday caused the USD/JPY pair to negate all intraday gains and close trade with only a two-pip loss. The Greenback appears to be gravitating towards the 114.00 major level, thus, a positive outcome today would not be a surprise. Moreover, technical indicators keep suggesting that a bullish development is the most probable outcome. In case bulls do prevail, gains are unlikely to exceed the 114.20, where a tough psychological resistance is located. On the other hand, there is a decent chance of a sell-off taking place, with the exchange rate seen falling as low as 103.40.Daily chart
The 200-hour SMA succeeded in preventing the USD/JPY currency pair from slumping further yesterday, but risks of a breach occurring today are present. The next target will be the 103.00 major level. Once crossed, the pair is expected to begin moving back towards 100.00 level and retest the support line around that area.
Hourly chart
Bears keep losing numbers, as 61% of all open positions are short today (previously 62%). The portion of buy orders barely changed as well, having risen from 53 to 54% over the last 24 hours.
Meanwhile, there has been a decrease in the number of long positions at other brokers. Right now 52% of OANDA clients are bulls, compared to 54% on Tuesday. Saxo Bank clients, however, are slightly more bullish than on Tuesday, being that the portion of longs now takes up 59% of the market.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between September 19 and October 19, traders expect the US Dollar to appreciate to 104.74 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 76% of all forecasts fall above 102 yen, which is close to the current spot price. By far the most popular interval is 108.00-109.50, chosen by 18% of all the surveyed, compared to popularity of the 105.00-106.50, 106.50-108.00 and 109.50-111.00 intervals.