- 57% of all pending orders are to acquire the Buck
- Nearly three quarters (74%) of all open positions are long
- Immediate resistance lies around 108.89
- The closest support rests at 108.74
- Upcoming events: Philadelphia Fed Manufacturing Index, US Initial Jobless Claims, US Treasury Secretary Mnuchin's Speech
US homebuilding activity dropped more than expected last month amid the unusually warm weather and weaker manufacturing activity, official figures revealed on Tuesday. The US Department of Commerce reported that housing starts fell 6.8% to a seasonally adjusted rate of 1.22M, as construction of single-family homes in the Midwest posted the largest decline since 2014. Meanwhile, market analysts anticipated a slighter drop to a 1.25M unit rate in March, following the preceding month's upwardly revised 1.30M unit rate. On an annual basis, housing starts were up 9.2%. Data also showed that building permits climbed to a 1.26M unit rate in March, compared to the previous month's upwardly revised 1.22M unit rate, whereas analysts expected a rise to 1.25M unit rate.
Separately, the Federal Reserve reported that manufacturing output plunged 0.4% in March, driven by a 3.0% decrease in the motor vehicle and part sector. On a yearly basis, manufacturing output advanced 2.7% in the Q1 of 2017. Both reports raised concerns over the Fed postponing its second rate hike this year. Moreover, the data suggested that the US economy performed weaker than expected in the Q1. Following Tuesday's releases, the US Dollar hit its three week low against a basket of major currencies.
Focus is completely on US fundamentals
Today attention could be paid to the Philadelphia Fed Manufacturing Survey, which is a spread index of manufacturing conditions within the Federal Reserve Bank of Philadelphia. This survey, served as an indicator of manufacturing sector trends, is interrelated with the ISM Manufacturing Index and the index of industrial production. It is also used as a forecast of the ISM Index. Another data release will be 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 in this market, which influences the strength and direction of the US economy. US Treasury Secretary Mnuchin's speech is also an important event, as any provided information concerning further rate hikes could impact the US Dollar dramatically.USD/JPY anchored around the 200-day SMA
The US Dollar managed to appreciate against the Yen on Wednesday, with the monthly S1 limiting upside volatility. Ultimately, trade closed in front of the 200-day SMA, but this level remains an unreliable resistance. Nevertheless, the Buck is still unlikely to post significant gains, as supply, represented by the monthly S1, is still intact. However, the RSI indicator suggests the Greenback is to keep recovering, thus, preserving the descending channel pattern. Overall, the majority of signals are bullish, despite other bearish signs. A lot of uncertainty is currently surrounding the USD/JPY, especially since political events and factors continue to pressure the US currency.Daily chart
Although not really reliable, but on the hourly chart the USD/JPY pair formed a triangle pattern, which is approaching its apex, with a breakout expected to occur tomorrow if not today. The upper border is now reinforced by the 200-hour SMA, while the lower one is now weaker due to previous breakout attempts.
Hourly chart
Nearly three quarters (74%) of all open positions are long today, whereas 57% of all pending orders are to acquire the Buck.
Right now 63% of OANDA clients are bulls, compared to 65% on Wednesday, the bullish sentiment has been holding around the same level for some time now. In the meantime, Saxo Bank clients retain a positive outlook towards the US Dollar, with their sentiment being close to ours, being that 71% of their open positions are now long and the remaining 29% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between March 20 and April 20, traders expect the US Dollar to appreciate to 111.18 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 51% of all forecasts fall above 111 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 108.00 and 109.50 yen in three months, with 15% of the survey participants choosing this trading range. At the same time, the second most popular interval was the 112.50-114.00 one, with 13% of survey participants choosing it.