- The share of buy orders slid from 57 to 53%
- 57% of all open positions are long
- The nearest resistance is located at 104.43
- The closest support rests around 103.80
- Upcoming events: US HPI, US CB Consumer Confidence, Japanese CSPI
Activity in the US manufacturing sector expanded more than expected last month, according to a private survey published on Monday. The Market Research Group said that its Preliminary Manufacturing Purchasing Manager's Index for the United States jumped to 53.2 in October, following the preceding month's final reading of 51.5 and surpassing the 51.6 market forecast. Any reading above 50 points indicates an expansion and is based on a survey of manufacturers across the country. US manufacturers recorded strongest upturn in business conditions for 12 months in October, while both output and new order growth touched their one-year peaks last month. The US manufacturing sector was hit severely by the US Dollar's sharp appreciation and weak global economic growth. Back in September, the PMI rebounded from a contractionary reading of 49.4, the first drop below the 50 point-level since February. Furthermore, some respondents mentioned there was a rise in international and domestic sales.
After the release, the US Dollar rose slightly against other major currencies, trading at 1.0890 against the Euro, 1.2233 against the British Pound and 104.08 against the Japanese Yen.
US HPI, CB Consumer Confidence and Japanese CSPI
Tuesday is rather quiet in terms of important economic data releases, but traders could still pay some attention on the US HPI. It provides an estimated value of housing market conditions. It is an important indicator as the housing market is considered as a sensitive factor to the US economy. Generally speaking, a high reading is seen as positive for the USD, while a low reading is seen as negative. Another event will be 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. From the Japanese side there will be only one event, namely the CSPI. It measures the prices of services traded among companies. It presents price developments that reflect most sensitively the supply and demand conditions in the services market. It is also considered as an indicator for inflationary pressures. Normally, a high reading is seen as positive for the JPY, while a low reading is seen as negative.USD/JPY on the edge of breaking out of its trading range
On Monday the USD/JPY pair reached the upper border of its consolidation trend, meaning that there was a 30-pip rally. Technically, the exchange rate is expected to make a U-turn now and begin moving towards the lower boundary around 103.30. However, according to technical indicators a bullish development is possible, where the weekly R1 at 104.43 is seen as the key resistance. In case bears do prevail, the immediate demand area will be the cluster around 103.75, formed by the weekly PP and the monthly R1, while the consolidation trend's lower border is being bolstered by the weekly S1, the 20 and the 100-day SMAs.Daily chart
After another retest of the support line on Monday the USD/JPY currency pair began moving towards the upper border of a possible channel pattern. Once the upper trend-line is reached and no breakout occurs – the pattern will be fully confirmed, allowing to establish a solid trading range.
Hourly chart
Bears retreated again on Tuesday, as only 57% of all open positions are long today, compared to 59% yesterday.
Meanwhile, there has been an increase in the number of long positions at other brokers. Right now 54% of OANDA clients are bulls, compared to 52% on Monday. Saxo Bank clients, however, are slightly less bullish than on Monday, being that the portion of longs now takes up 57% 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 25 and October 25, 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 74% 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 19% of all the surveyed, compared to popularity of the 105.00-106.50, 106.50-108.00 and 109.50-111.00 intervals.