- The portion of purchase orders fell from 60 to 59%
- 51% of all open positions are long
- Immediate resistance lies at 114.00
- The closest support rests around 113.74
- Upcoming events: US Crude Oil Inventories, US HPI, US Jobless Claims, US New Home Sales, US Markit Services PMI
US homebuilding activity advanced more than expected in the last month of 2016, official figures revealed on Thursday. The Commerce Department reported housing starts rose 11.3% to a seasonally adjusted annual pace of 1.23 million in December, following the previous month's upwardly revised 1.10 million units and surpassing analysts' expectations for a 1.19 million-unit rate. The December increase suggested the housing market boosted economic growth in the Q4. Meanwhile, building permits came in at a seasonally adjusted annual pace of 1.21 million units in the same month, unchanged from November's upwardly revised reading, slightly missing economists' projections of a 1.22 million-unit rate.
Separately, the Philadelphia Federal Reserve said its Manufacturing Index jumped to 23.6 points in January, the highest level in more than two years, driven by a rise in new orders, which climbed to 26.0 from 14.90. Analysts anticipated a sharp fall to 16.2 points in January from the prior month's 21.5. Data also showed the Employment Index surged to 12.8 from 3.6, while the Business Outlook Index for the next six months hit its highest level since August 2014 of 56.6 points. Other data released on Thursday showed initial jobless claims fell 15,000 to 234,000 last week, the lowest level in more than 43 years.
US HPI is the only relevant event today
Wednesday is a relatively quiet day, as there are no significant economic data releases scheduled for today. However, the US HPI could have some impact, as 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. On Thursday, however, attention could be paid to the US Markit Services PMI. It captures conditions in the services sector. As the services sector dominates a large part of total GDP, the Services PMI is an important indicator of the overall economic condition in the US. Another possible event to have impact will be the New Home Sales. They are an important measure of housing market conditions. House buyers spend money on furnishing and financing their homes, so as a result the demand for goods, services and employees is stimulated.USD/JPY remains in bearish trend
Strong US fundamental data helped the Greenback negate most of Monday's losses yesterday, but with the four-week down-trend remaining intact. Consequently, the US Dollar is expected to suffer another loss today, reconfirming the bearish trend. The two closest supports are unlikely to limit the losses if too much selling occurs, however, the 112.59 mark is to be the bottom floor, which prevented the USD/JPY pair from declining on several occasions previously. Technical indicators are also in favour of the negative outcome, as they are giving bearish signals today.Daily chart
As was anticipated, the USD/JPY currency pair encountered strong resistance at the 114.00 mark, where the 200-hour SMA coincides with the 23.60% Fibo. As a result, the Greenback is likely to keep edging down, as it lacks impetus to pierce the resistance circa 114.00.
Hourly chart
Bulls are barely outnumbering the bears, as 51% of all open positions are long today (previously 53%). Meanwhile, the portion of purchase orders remains relatively the same, having fallen from 60 to 59%.
Right now 52% of OANDA clients are bulls, compared to 47% on Tuesday. In the meantime, Saxo Bank clients are barely managing to remain on the bullish side, being that 55% of their open positions are now long and the remaining 45% 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 25 and January 25, traders expect the US Dollar to appreciate to 117.73 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 53% 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 111.00 and 112.50 yen in three months, with 17% of the survey participants choosing this trading range. At the same time, the second most popular interval was the 123.00-124.50 one, with 12% of survey participants choosing them.