- SWFX market sentiment is 59% bearish (-9%)
- Pending orders in the 100-pip range are at equilibrium
- Significant resistance is found near 113.25
- Upcoming events: US Unemployment Claims, US Import prices m/m, Philly Fed Manufacturing Index, US Capacity Utilisation Rate, US Industrial Production m/m, FOMC Members Kaplan and Brainard to speak
The Labour Department revealed that the US consumer inflation eased to 0.1% from 0.5% in October, while its core figure appreciated to 0.2% in the same period.
Relatively strong readings pointed to the end of disinflationary trend, which worried the Fed the most. The report also showed a little slowdown in retail sales growth pace, though stronger consumers spending, including higher real wages and job gains are expected to encourage retailing in the next months.
US in focus
Several fundamental events should be noted in this session. The day will start with the United States publishing its weekly Unemployment Claims, monthly Import Prices and the Philadelphia Fed Manufacturing Index at 1330GMT, as well as its Capacity Utilisation Rate and Industrial Production for October at 1415GMT.
Meanwhile, three speeches are scheduled for today. The BOE Governor Mark Carney is set to speak along with Monetary Policy Committee members Ben Broadbent, Jon Cunliffe, and David Ramsden about economics at various public schools in Liverpool. In addition, the Federal Reserve Governor Lael Brainard will speak about financial technology at the Third Annual Financial Stability Conference at 2045GMT, while the President of the Federal Reserve Bank of Dallas Robert Kaplan is to participate at the Chartered Financial Analyst Society of Houston meeting; the time, however, is still tentative.
USD/JPY moves to south as expected
As it was expected, the currency exchange managed to break below both the psychological 113.00 level as well as the weekly S1 located at 112.86. A release of better than expected American retail sales and inflation data did not ruin this achievement.In contrast, it simply accelerated a rebound from the bottom trend-line of the currently active descending channel. Generally, the exchange rate is expected to resume the movement upwards.
However, there is a little chance that it will manage to climb above new combined resistance set up by the monthly PP and the falling 55- and 100-hour SMAs. To put it differently, the pair is expected to make another rebound and continue heading to the south. The main factor that might alter this assumption will be the upcoming US release of manufacturing data.
Hourly chart
It seems that the rate is gradually moving away from the upper channel boundary located circa 114.00. This might point to weakness in the medium and long term.
Meanwhile, the US Dollar was driven by strong bearish pressure on Wednesday; thus, it managed to push below the monthly PP down to the weekly S1 at 112.86. The rate has since reversed from this mark and is once again testing the aforementioned pivot point.
It is more likely that the southern barrier holds today, while the upside target could be set near the 113.80 mark where the 20-day SMA and the weekly PP are located.
Daily chart
The bearish SWFX market sentiment has weakened significantly in this session, as 59% of traders are holding short positions (-9%). Meanwhile, pending orders are at equilibrium.
The bearish market sentiment prevails for OANDA traders, as 53% of open positions are short (-1%). Meanwhile, the number of open positions of Saxo Bank clients is 53% long (+2%).