- The share of purchase orders edged up from 63 to 65%
- 53% of all open positions are long
- Immediate resistance lies at 113.46
- The closest support rests at 113.23
- Upcoming events: US Initial Jobless Claims, US HPI, US Crude Oil Inventories, US New Home Sales, Reuters/Michigan Consumer Sentiment
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.
Relatively quiet Thursday
Thursday is a relatively quiet day, with the only events being the US Housing Price Index and the Initial Jobless Claims. The Jobless Claims are a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labor market. A larger than expected number indicates weakness sin this market, which influences the strength and direction of the US economy. However, this data tends to have a very limited impact on the exchange rates. The Housing price Index 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.USD/JPY continues to consolidate
The FOMC Minutes barely affected the markets yesterday, as no clear clue concerning a future interest rate hike was provided. As a result, the US Dollar closed with a 33-pip loss against the Japanese Yen, retaining its position above 113.00. Technical indicators keep giving mixed signals in the daily timeframe, but the weekly ones now are giving distinctly bullish, implying the USD/JPY pair could soon break out from its consolidation trend. However, in order to fully achieve this goal the Greenback is required to stabilise above the 115.00 major level, meaning the tough resistance, formed by the weekly R1, the monthly PP, the Bollinger band and the 55-day SMA, needs to be overcome.Daily chart
The pair keeps putting the 2.5-week support line to test, with higher risks of a breach present. The 200-hour SMA keeps weighing on the USD/JPY pair and pushing it lower, taking advantage of the lack of fundamental or political impetus. Nevertheless, the hourly chart is unable to provide a clearer picture or suggest the consolidation trend is soon to end.
Hourly chart
Today 53% of all open positions are long (previously 52%). The share of purchase orders also edged higher, namely from 63 to 65%.
Right now 56% of OANDA clients are bulls, compared to 55% on Wednesday. In the meantime, Saxo Bank clients remain on the bullish side, being that 57% of their open positions are now long and the remaining 43% 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 23 and February 23, traders expect the US Dollar to appreciate to 114.03 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 55% 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 interval was the 114.00-115.50 one, with 15% of survey participants choosing it.