- The share of buy orders inched up from 48 to 55%
- Two thirds (66%) of all open positions are long
- Immediate resistance lies around 113.15
- The closest support rests around 112.64
- Upcoming events: US Core PCE Price Index, US Personal Spending & Income, US Manufacturing PMI, US Beige Book, US Crude Oil Inventories
The US economy grew less than expected in December quarter even in spite of higher consumer spending observed in the reported period. Figures released on Tuesday showed the US economy grew at an annualised pace of 1.9% in the Q4, following a strong 3.5% reading registered in the preceding quarter and falling behind analysts' expectations for a 2.1% rise. In the report, the Commerce Department highlighted that the economic growth was mainly boosted by consumer spending that was revised to 3.0% from 2.5% reported previously. With household spending accounting for no less than 70% of the American economic activity, analysts around the world remained optimistic on the overall growth in the country in the months ahead. Furthermore, the report revealed that the surge in purchases by consumers in the final quarter of 2016 was mainly driven by higher sales of new cars and trucks.
Apart from that, Americans were seen to have spent more on health care. On balance, inventory investment was revised down to $46.2B from $48.7B, while spending on equipment rose a more modest 1.9% instead of 3.1% originally estimated. Moreover, there were changes in trade figures, with imports climbing 8.5% along with a sharp 4.0% decline in observed in exports.
A number of US data are due
Today's focus falls on the US Manufacturing PMI, released by both Markit Economics and Institute for Supply Management, it captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the Manufacturing PMI is an important indicator of business conditions and the overall economic condition in the US. Additionally focus should be on the Core PCE Price Index. It is an average amount of money that consumers spend in a month. "Core" excludes seasonally volatile products, such as food and energy, in order to capture an accurate calculation of the expenditure. It is a significant indicator of inflation. Furthermore, the Personal Spending is another important event, as it measure purchases of goods and services by households and by non-profit institutions that serve households from private business. In addition to that, the Personal Income measures the total income received by individuals, from all sources including wages and salaries, interest, dividends, rent, workers' compensation, proprietors' earnings, and transfer payments. This figure can provide insight on the US employment situation. Finally, the US Beige Book. It report on the current US economic situation. Through interviews with key business contacts, economists, 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/JPY attempts to break the down-trend
Trump's speech yesterday boosted the US Dollar, causing the USD/JPY currency pair to recover from its intraday low of 111.75. However, the Buck was unable to post solid gains against the Yen, thus, the down-trend remains preserved. Following yesterday's events, the Greenback is likely to retain its strength and continue outperforming the Japanese currency. The closest resistance is located around 113.15, formed by the 20-day SMA, the bearish trend-line and the weekly R1, which should technically limit the gains. A breach of this area would open the door for a surge to the cluster circa 114.50, namely the upper border of the six-week consolidation trend.Daily chart
As was expected, Trump managed to boost the US Dollar yesterday, causing the down-trend to be breached. The 200-hour SMA also failed to contain the volatility, with the exchange rate approaching a one-week high of 113.70. The pair is required to stabilise above 115.00 if the longer-term down-trend, as seen on the daily chart, is to be reached and potentially overcome.
Hourly chart
Today two thirds (66%) of all open positions are long, compared to 65% yesterday. The share of buy orders inched up from 48 to 55%.
Right now 57% of OANDA clients are bulls, compared to 60% on Tuesday. In the meantime, Saxo Bank clients barely remain on the bullish side, being that 53% of their open positions are now long and the remaining 47% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between February 01 and March 01, traders expect the US Dollar to appreciate to 114.75 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 62% 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 114.00 and 115.50 yen in three months, with 19% of the survey participants choosing this trading range. At the same time, the second most popular interval was the 120.00-121.50 one, with 14% of survey participants choosing it.