- 59% of all pending orders are to acquire the US Dollar
- 57% of all open positions are long
- Immediate resistance lies circa 113.40
- The closest support rests around 111.75
- Upcoming events: US Manufacturing PMI, US Services PMI
US building permits advanced more than expected whereas homebuilding activity weakened in January, official figures revealed on Thursday. The Commerce Department reported building permits rose 4.6% to a seasonally adjusted annual pace of 1.29 million in January, following the previous month's upwardly revised 1.23 million units and surpassing analysts' expectations for a 1.23 million-unit rate. The increase caught markets by surprise, as the figure reached the highest level since November 2015, suggesting solid growth in starts in the middle of 2017.
Meanwhile, housing starts declined 2.6% to an annualised rate of 1.25 million units in the same month, following December's upwardly revised reading of 1.28 million, whereas economists expected them to increase to a 1.23. Analysts suggest that the housing market recovery is likely to be sustained by strong labor market, which supported household formation. Separately, the Philadelphia Federal Reserve said its Manufacturing Index jumped to 43.3 points in February, the highest level in 33 years, driven by a jump in new orders, which climbed to 38.0 from 26.00. Data also showed the Employment Index fell to 11.1 from 12.8, while the Business Outlook Index for the next six months slid to 53.5 points.
US Services and Manufacturing PMIs due on Tuesday
There are no important upcoming events on Monday, thus, all focus turns to Tuesday. On Tuesday the most impact is likely to be from the US fundamentals, namely the Services PMI and the Manufacturing PMI. The Services PMI captures business 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. The Manufacturing PMI, however, captures business conditions in the manufacturing sector. It is an important indicator of business conditions and the overall economic condition in the US, also taking up a significant part of total GDP.USD/JPY anchored around 113.00
The USD/JPY currency pair followed a less positive for the Greenback path on Friday, having fallen under the 113.00 threshold after successfully maintaining trade above it for a whole week. The given pair still remains in a consolidation trend, meaning there is sufficient room for a decline towards 111.75 today, where the weekly S1 and the lower Bollinger band form support. On the other hand, a rally is also possible, with the 115.00 level being the main target, but with the 20-day SMA and the weekly PP representing immediate resistance circa 113.40 and another obstacle located around 114.40. Meanwhile, technical indicators are unable to confirm the possibility of either scenario.Daily chart
Upon touching the 115.00 major level in the middle of the previous week, the USD/JPY pair appears to have topped out, as a rather sharp and steady spark of bearish momentum pushed the pair back under 113.00. The Buck could now resume trade below the 200-hour SMA, occasionally trading above it, but most of the time remaining below.
Hourly chart
Today 57% of all open positions are long (previously 55%), whereas 59% of all pending orders are to acquire the US Dollar, up from 57%.
Right now 59% of OANDA clients are bulls, compared to 54% on Friday. In the meantime, Saxo Bank clients remain on the bullish side, being that 58% of their open positions are now long and the remaining 42% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between January 20 and February 20, traders expect the US Dollar to appreciate to 114.02 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 54% of all forecasts fall above 114 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 106.50 and 108.00 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 114.00-115.50 and the 120.00-121.50 ones, with 13% of survey participants choosing each of them.