- The share of sell orders increased from 48 to 59%
- 60% of traders are short the US Dollar
- Immediate resistance lies at 116.30
- The closest support rests around 114.00
- Upcoming events: US Monthly Budget Statement, US Import Prices
Mood of American shoppers improved markedly in December, following Donald Trump's surprise victory in the US presidency elections, official figures revealed on Friday. The University of Michigan reported its preliminary Consumer Sentiment Index jumped to 98.0, the highest reading since January, while marked analysts anticipated a slighter improvement to 94.3 from November's 93.8 points. Confidence among consumers rose shortly after the elections. The Current Conditions Index, which measures the way consumers feel about the present state of the economy, advanced to 122.1 in December from the preceding month's 117.3 points, the highest level since 2005. A record number of survey respondents pointed to the positive effects of new policies.
Furthermore, the survey showed the proportion of people expecting the economy and labor market to improve next year also increased in the reported month. The gauge of expectations six months from now climbed to 88.9, the highest since January 2015, following the prior month's 85.2 points. Consumers' inflation expectations for the next year declined to 2.3%, the lowest level since 2010, compared with November's 2.4%, while their expectations for inflation over the next 10 years fell to 2.5% from 2.6%.
US Monthly Budget Statement is the only event today
On Monday there is only one relevant event that is likely to have some impact on the USD/JPY pair's performance, namely the US 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.USD/JPY sets eye on 116.00
Friday ended with the Greenback posting solid gains versus the Japanese Yen, with the 115.00 level being easily overcome, as the 114.50 psychological resistance failed to limit the gains. According to technical indicators, the USD/JPY is to keep edging higher today, but with gains unlikely exceeding 100 pips, as the weekly R1 and the upper Bollinger band form a relatively tough resistance area circa 116.35. A bearish development is doubtful, due to the Buck being supported by a four-week up-trend, which in turn is reinforced by the weekly PP, the weekly S1 and the 23.60% Fibo.Daily chart
With sufficient bullish momentum received from retesting the 200-hour SMA last week, the US Dollar managed to return above the trend-line and continue moving higher. The 116.00 mark now represents an obstacle, but if the up-trend is preserved, the pair is to climb over this area by week's end.
Hourly chart
Market sentiment did not change over the weekend, with 60% of traders being short and the remaining 40% being long the US Dollar. At the same time, the share of sell orders increased from 48 to 59%.
Meanwhile, there has been an increase in the number of long positions at other brokers. Right now 60% of OANDA clients are bears, unchanged since Friday. 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 November 12 and December 12, traders expect the US Dollar to appreciate to 111.58 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 66% of all forecasts fall above 111 yen, which is close to the current spot price. The majority of people voted expect the US Dollar to cost somewhere either between 117.00 and 118.50 yen in three months, with 14% of the survey participants choosing this trading range. Meanwhile, the second most popular intervals are the 111.00-112.50 and the 112.50-114.00 ones, with 10% of the votes each, also followed by the 109.50-111.00, 114.00-115.50 and 115.50-117.00, 118.50-120.00 and 120.00-121.50, each chosen by 8% of all the surveyed.