- The portion of buy orders edged down from 67 to 59%
- Market sentiment remains bullish at 61%
- Immediate resistance lies around 112.75
- The closest support rests around 111.60
- Upcoming events: US Durable and Core Durable Goods Orders, US Pending Home Sales
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 Durable & Core Durable Goods Orders
On Monday all focus is on the US fundamentals, such as the Durable Goods Orders. The Durable Goods Orders measure the cost of orders received by manufacturers for durable goods, which means goods planned to last for three years or more, such as motor vehicles and appliances. As those durable products often involve large investments, they are sensitive to the US economic situation. The final figure shows the state of US production activity. Core Durable Goods Orders, however, exclude the transport sector. Another data release worth paying attention to today will be the US Pending Home Sales. They are a leading indicator of trends of the housing market in the US. They capture residential housing contract activity of existing single-family homes. As the housing market is considered as a sensitive factor to the US economy, it generates some volatility for the USD.USD/JPY in limbo ahead of durable goods orders data
The less favourable for the US Dollar scenario prevailed on Friday, causing the pair to edge lower once again. Nevertheless, the USD/JPY pair managed to retain its position above the 112.00 handle, which in turn is supported by the 100-day SMA, the lower Bollinger band and the weekly S1, while the 111.75 mark also acts as a tough psychological support. Consequently, another bearish development is unlikely, despite technical indicators suggesting so. The Greenback could easily reach the 113.00 level today, should the fundamentals provide a sufficient boost later during the day; however, disappointing data could still cause a downside reaction.Daily chart
The US Dollar keeps struggling to edge higher, with a bearish trend-line keeping the exchange rate at bay for two weeks now. The situation on the hourly chart somewhat supports the outlook of the daily one, as the current trend-line could prevent the bulls from reaching the 113.00 level.
Hourly chart
Market sentiment remains bullish, now at 61% (previously 54%). Meanwhile, the portion of buy orders edged down from 67 to 59%.
Right now 63% of OANDA clients are bulls, compared to 57% on Friday. In the meantime, Saxo Bank clients remain on the bullish side, being that 60% of their open positions are now long and the remaining 40% 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 27 and February 27, 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 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 13% of survey participants choosing it.