- The share of purchase orders inched up from 65 to 67%
- 54% of traders are long the Buck
- Immediate resistance lies at 113.30
- The closest support rests around 112.85
- Upcoming events: US New Home Sales, Reuters/Michigan Consumer Sentiment
The number of Americans filing for unemployment benefits increased slightly more than expected last week, though the four-week average dropped 4,000 to 241,000, weakest level since 1973, official figures revealed on Thursday. Last week's results were driven by growing economy and tight labour market, which is likely to prompt companies to retain experienced workers, supporting wage growth. According to the US Department of Labour, national jobless claims rose 6,000 to 244,000 during the week ended February 17 from the preceding week's upwardly revised 238,000.
Meanwhile, economists anticipated an acceleration to 242,000 during the reported period. Filings have been holding below 300,000 for 103 straight weeks, showing healthy signs of the US job market. In the meantime, continuing claims fell 17,000 to 2.06 million during the week ended February 11, while their four-week moving average dropped 10,750. Overall, the Federal Reserve is widely expected to increase interest rates fairly soon, with labour market and inflation data set to reveal better performance. The last time the Fed raised its benchmark overnight rate was in December last year, when the rate was increased from 0.5% to 0.75%.
US New Home Sales is the only event today
Friday is also a quiet day in terms of fundamental data releases, with the only relevant event being the US New Home Sales. The New Home Sales is 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. However, on Monday traders can focus on the US Durable and Core Durable Goods orders data release, as well as Pending Home Sales.USD/JPY attempts to reclaim 113.00
Lack of certainty concerning the US tax reforms triggered USD-selling, causing it to drop 69 pips against the Japanese Yen yesterday. Thursday's bearish development still does not change the overall picture, as the pair remains in its consolidation trend. The demand cluster just under the 112.00 mark represents the lower boundary, whereas the resistance area just under 115.00 is the upper border. According to the recent developments, a positive outcome today is the most probable scenario, with trade closing circa 113.10. However, we should not rule out the possibility of another leg down, as technical indicators keep giving mixed signals in the daily timeframe.Daily chart
On the hourly chart the USD/JPY currency pair breached the up-trend, which suggests that more weakness could now follow. Consequently, the consolidation trend's lower boundary, namely the area around 111.70/50 could be reached in the first half of next week. .
Hourly chart
There are 54% of traders being long the Buck today (previously 53%). At the same time, the share of purchase orders inched up from 65 to 67%.
Right now 57% of OANDA clients are bulls, compared to 56% on Thursday. In the meantime, Saxo Bank clients remain on the bullish side, being that 59% of their open positions are now long and the remaining 41% 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 24 and February 24, traders expect the US Dollar to appreciate to 114.18 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 57% 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 either between 106.50 and 108.00 or between 114.00 and 115.50 yen in three months, with 18% of the survey participants each choosing these trading ranges. At the same time, the second most popular interval was the 120.00-121.50 one, with 15% of survey participants choosing it.