- The portion of purchase orders decreased from 73 to 46%
- 60% of all open positions are long
- Immediate resistance lies around 105.73
- The closest support rests at 104.71
- Upcoming events: US Initial Jobless Claims, FOMC Member Bullard Speech, US Federal Budget Balance, Japanese PPI
Donald Trump's election as the 45th president of the United States sent shock waves across the world. His victory allowed the Republic Party to maintain the Senate, as well as win the White House. According to the final figures, in the presidential race of 2016 Trump won 276 electoral votes. Despite the post-election uncertainty, the US economy is set to continue its expansion at a rate of 2%. Moreover, analysts still expect a rate hike from the Federal Reserve in December, as markets are likely to stabilize ahead of the monetary policy meeting. Once the news broke, the Mexican Peso dropped more than 13%, hitting its overnight low, whereas the price of gold advanced 4.9% to $1,337.4 per ounce. European stock markets fell around 2.3%, compared to a 9% plunge after Britain's decision to leave the European Union. However, European stocks managed to finish higher, with the FTSE rising around 1% after falling 2% at the start of the trading day.
Separately, the Energy Information Administration reported on Wednesday that US crude oil inventories increased 2.4 million barrels in the week ended November 4, following the preceding week's rise of 14.4 million barrels and surpassing the 1.3 million-barrel gain forecast.
No significant events due on Thursday
Today on Thursday there is are no significant events to influence the USD/JPY pair's performance, but attention could still be paid to the US Initial Jobless Claims and the US Monthly Budget Statement. The Jobless Claims are a measure of the number of people filing first-time claims for state unemployment insurance. It provides a measure of strength in the labor market. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy. Generally speaking, a decreasing number should be taken as positive or bullish for the USD. As for the Monthly Budget Statement, it summarizes the financial activities of federal entities, disbursing officers, and Federal Reserve Banks. A positive budget statement that receipts exceed budgetary outlays is seen as bullish for the USD. On the other hands, a negative figure that indicates government debt is seen as bearish. However, from the Japanese side attention could be paid to the PPI, which is a measure of prices for goods purchased by domestic corporates in Japan. The PPI is correlated with the CPI and is a way to measure changes in manufacturing cost and inflation in Japan. A high reading is seen as anticipatory of a rate hike and is positive for the JPY, while a low reading is seen as negative.USD/JPY sets eye on 105.00
Even though the US Dollar slumped more than 400 pips on Wednesday, excessive profit-taking caused the Buck to not only fully recover from those losses, but to even close trade with a 50-pip rally by the end of the day. Today technical studies keep suggesting the USD/JPY pair is to prolong the gains, but a bearish correction is still expected to take place. The Bollinger band around 105.73 is the closest resistance, also indicating the highest possible level the Greenback can reach during the day. At the same time, the nearest support rests at 104.71, but the 105.00 psychological level is the main intraday target.Daily chart
There are no clear signs to predict the USD/JPY pair's movements at this point, but the upside for now is seen as limited, due to the 38.20% Fibo providing resistance at 106.68. However, the pair is also reluctant to keep weakening, thus, risks are skewed more to the upside.
Hourly chart
Bulls retreated over the past 24 hours, being that there are 60% of long positions today (previously 65%). Meanwhile, the portion of purchase orders decreased from 73 to 46%.
Meanwhile, there has been an increase in the number of long positions at other brokers. Right now 61% of OANDA clients are bulls, compared to 57% on Wednesday. In the meantime, Saxo Bank clients are as bullish as on Wednesday, being that the portion of longs still takes up 51% of the market.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between October 10 and November 10, traders expect the US Dollar to appreciate to 105.78 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 71% of all forecasts fall above 102 yen, which is close to the current spot price. The majority of people voted expect the US Dollar to cost more than 111.00 yen in three months, with 18% of the survey participants choosing that trading range. Meanwhile, the second most popular interval is the 105.00-106.50 one, chosen by 15% of all the surveyed, compared to popularity of the 106.50-108.00, 108.00-109.50 and 109.50-111.00 intervals.