- The portion of buy orders rose to 56%
- 57% of all open positions are short
- Immediate resistance lies around 105.16
- The closest support rests around 104.66
- Upcoming events: US Manufacturing PMI, US Construction Spending
Consumer spending in the United States increased more than expected last month amid higher purchases of motor vehicles and higher inflation, official data revealed on Monday. According to the US Department of Commerce, consumer spending jumped 0.5% in September, following the preceding month's downwardly revised fall of 0.1% and meeting analysts' expectations. When adjusting for inflation, Monday's report showed consumer spending advanced 0.3% in the reported month after dropping 0.2% in August. In the meantime, the PCE Price Index grew 0.2% in September, the same pace as in the previous month. Year-over-year, the Index climbed 1.2%, the largest annual gain since November 2014, up from August's gain of 1.0%. Furthermore, the so-called core PCE Index increased 0.1% in the same month, compared to the 0.2% rise registered in August. On an annual basis, the core PCE Index advanced 1.7%, the similar increase in the preceding month.
The Fed is not expected to raise interest rates at that meeting ahead of the presidential election; however, analysts widely anticipate a rate hike in December. Back in September, the Fed held rates steady for the sixth straight meeting.
US fundamental in focus again
There are two relevant events today, namely the US Manufacturing PMI and Construction Spending. The Manufacturing PMI is released by both the Markit Economics and the 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. As for the US Construction Spending, it is an indicator that measures the total amount of spending in the US on all types of construction. The residential construction component is useful for predicting future national new home sales and mortgage origination volume.USD/JPY takes another shot at 105.00
As was anticipated, the US Dollar outperformed the Yen on Monday, but was unable to climb over the 105.00 major level, despite volatility stretching beyond that area. Nevertheless, the pair managed to preserve the five-week up-trend, thus, more bullish momentum is expected to follow. Meanwhile, technical indicators retain bullish signals, bolstering the possibility of the positive outcome. The Bollinger band keeps providing immediate resistance, now around 105.16, which is likely to be the ceiling for today's gains if the 105.00 level is overcome.Daily chart
The USD/JPY pair continued to test the channel's lower boundary, unable to receive sufficient impetus for another surge towards the resistance line around 105.70. Today's bullish development is also seen as limited, with exterior factors, such as the US presidential elections, driving the US currency sideways.
Hourly chart
Bears keep taking over the market, as now 57% of all open positions are short, compared to 55% previously. At the same time, the portion of buy orders added 2% points, rising to a total of 56%.
Meanwhile, there has been a decrease in the number of long positions at other brokers. Right now 54% of OANDA clients are bulls, compared to 55% on Monday. Meanwhile, Saxo Bank clients are slightly more bullish than on Monday, being that the portion of longs now takes up 54% of the market.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between October 01 and November 01, traders expect the US Dollar to appreciate to 105.56 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 76% of all forecasts fall above 102 yen, which is close to the current spot price. By far the most popular interval is 108.00-109.50, chosen by 18% of all the surveyed, compared to popularity of the 105.00-106.50, 106.50-108.00 and 109.50-111.00 intervals.