- 51% of all pending orders are to purchase the US currency
- 59% of all open positions are short
- Immediate resistance lies at 112.48
- The closest support rests around 111.00
- Upcoming events: US ADP Non-Farm Employment Change, US Personal Spending and Income, US Core PCE Price Index, US Pending Home Sales, US Crude Oil Inventories, US Beige Book
Japan's industrial production went up for a third consecutive month in October, with a slight add just beating the median forecast of economists, since the nation's exports compensate for weak domestic spending as well as fanning hopes of a gradual recovery in the country's manufacturing sector. According to the Ministry of Economy, Trade and Industry data, industrial production went up 0.1% from September while median estimate of economists forecast a decline of 0.1%. Moreover, industrial production was revised sharply higher in September to reflect 0.6% growth. The preliminary estimate just two weeks prior showed no change in the headline reading. The sharp revision reflects the volatile nature of the monthly data series.
In the meantime, Japan's manufacturing sector has returned to growth after a prolonged contraction earlier this year that was made worse by devastating earthquakes in the southern part of the country. The IHS Markit/Nikkei Manufacturing PMI surged above 50 in September and has remained above that key market ever since. A PMI figure above 50 signifies expansion in economic activity.
Attention remains on US fundamentals
Wednesday is rich in terms of US fundamental data, such as the ADP Non-Farm Employment Change. It is a measure of the change in the number of employed people in the US. Generally speaking, a rise in this indicator has positive implications for consumer spending, stimulating economic growth. It also provides insight to the US NFP data, which is due on Friday. Another important event today is the Core PCE Price Index. It is an average amount of money that consumers spend in a month. "Core" excludes seasonally volatile products, such as food and energy, in order to capture an accurate calculation of the expenditure. It is also a significant indicator of inflation. Going further is the US Beige Book, which 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, or bullish for the USD, whereas a pessimistic view is considered as negative.USD/JPY attempts to erase Monday's losses
Although the US Dollar appreciated against the Yen on Tuesday, the pair surprisingly closed below the immediate resistance, namely the weekly pivot point. However, the given supply area is unlikely to manage to keep the Buck from edging higher for the second day in a row, unless fundamental data puts more pressure on the American Dollar. In case bulls prevail, the 113.50 level is seen as the intraday ceiling, whereas a bearish development could extend as far as the 111.00 major level, where the weekly S1 coincides with the monthly R3. Meanwhile, technical indicators remain in favour of the positive outcome.Daily chart
A clear picture is seen of the USD/JPY pair unable to fall below the 200-hour SMA, each time finding support before it is even reached. As a result, even if bears take over today, the 112.00 mark is expected to hold, as that is where the 200-hour SMA is located at.
Hourly chart
Today 59% of all open positions are short (previously 58%). At the same time, there are 51% of all pending orders to purchase the US currency.
Meanwhile, there has been a small increase in the number of long positions at other brokers. Right now 55% of OANDA clients are bears, compared to 57% on Tuesday. In the meantime, Saxo Bank clients also remain slightly on the bearish side, being that the portion of shorts 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 30 and November 30, traders expect the US Dollar to appreciate to 109.50 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 61% of all forecasts fall above 108 yen, which is close to the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 111.00 and 112.50 yen in three months, with 19% of the survey participants choosing that trading range. Meanwhile, the second most popular interval is the 105.00-106.50 one, chosen by 12% of all the surveyed, compared to popularity of the 106.50-108.00, 108.00-109.50 and 109.50-111.00 intervals.