- The portion of purchase orders inched slightly down from 73 to 69%.
- Traders' sentiment reached a perfect equilibrium
- Immediate resistance lies at 115.30
- The closest support rests around 113.90
- Upcoming events: US CPI and Core CPI, US Capacity Utilization Rate, US Industrial Production, US Beige Book, Fed Chair Yellen's Speech
US retail sales rose more than expected last month amid higher demand for furniture and automobiles, figures showed on Friday. According to the Department of Commerce, retail sales advanced 0.6% in December, following the preceding month's upwardly revised 0.2% gain and surpassing analysts' expectations for an increase of 0.5%. The following increase provided further evidence that the US economy gained momentum in the last three months of 2016. In addition, retail sales grew 4.1% on annual basis and 3.3% over the past year. Sales of automobiles contributed most to this increase, jumping 2.4%.Excluding volatile items, sales climbed 0.2% last month, compared to November's upwardly revised rise of 0.3%, while analysts anticipated an increase of 0.5% during the reported period. Separately, the Department of Labor reported its Producer Price Index surged 0.3% in December, after rising 0.4% in the prior month.
However, the reading topped economists' forecasts for a 1.1% increase. The PPI grew 1.3% compared to the same period one year ago and 1.6% for all of 2016. The rise was mainly driven by stronger oil prices that rose above $50 per barrel over the past months. In the meantime, the University of Michigan said its flash Consumer Confidence Index fell to 98.1 in January, following December's final reading of 98.2 and missing expectations for 98.6.
No solid events until Wednesday
There are no important data releases scheduled for today, however, on Wednesday attention should be paid to the US inflation data, namely the CPI. It is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. In Core CPI food and energy are excluded from calculations in order to capture a more accurate reading. Another important reading will be the Industrial Production. It shows the volume of production of US industries such as factories and manufacturing. Up-trend is regarded as inflationary, which may anticipate interest rate rise. Further attention could be paid to the US Beige Book, as it reports on the current US economic situation. Through interviews with key business contacts, economics, 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.USD falls as demand for safe haven Yen rises
For the sixth consecutive day yesterday the US Dollar weakened against the Japanese Yen, however, retaining its position above the 114.00 level. Even though the pair is supported by a tough demand cluster, represented by the 55-day SMA, the Bollinger band, the weekly and the monthly S1s, downside risks still persist. Moreover, technical studies also suggest the Greenback is to weaken, as they are now giving bearish signals. Risk-aversion is once again the main driver for the USD/JPY currency pair; in case of a hard shift to the risk-off sentiment, the 113.00 mark is expected to fail to hold the pair afloat today.Daily chart
The 23.60% Fibo finally gave in, causing the USD/JPY currency pair to drop below the 114.00 level today. From this point the Buck is likely to fall further down, with the main target being the 113.00 level, as it was the lowest point in December, suggesting it is also a strong psychological support.
Hourly chart
Traders' sentiment reached a perfect equilibrium today, whereas the portion of purchase orders inched slightly down, namely from 73 to 69%.
Right now 51% of OANDA clients are bears, compared to 53% on Monday. In the meantime, Saxo Bank clients remain on the bullish side, being that 54% of their open positions are now long and the remaining 46% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between December 17 and January 17, traders expect the US Dollar to appreciate to 119.27 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 63% of all forecasts fall above 117 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 123.00 and 124.50 yen in three months, with 18% of the survey participants choosing this trading range. At the same time, the second most popular intervals were the 111.00-112.50 and the 124.50-126.00 ones, with 15% of survey participants choosing them.