- The share of buy orders increased from 43 to 52%
- 54% of all open positions are short
- Immediate resistance lies at 110.75
- The closest support rests around 109.77
- Upcoming events: FOMC Member Bullard's, Maechler's, Dudley's and George's Speeches, US CB Leading Index, Japanese Trade Balance, US Existing Home Sales
US consumer prices see the biggest increase in six months in October amid higher gasoline and rent costs. According to the US Department of Labor, the Consumer Price Index advanced 0.4% last month, following September's gain of 0.3%. On a yearly basis, consumer prices grew 1.6% in October, the largest annual increase since October 2014, up from the preceding month's 1.5%. Both readings came in line with analysts' expectations.
Nevertheless, the so-called core CPI, which excludes prices for volatile items such as energy and food, rose 0.1% in the reported month, unchanged from September, while market analysts anticipated a slight increase to 0.2%. Year-over-year, core consumer prices fell to 2.1% in October, following the prior month's 2.2% gain. Higher inflation as well as the strong labor market are likely to encourage the Federal Reserve to raise its key interest rates at its next meeting in December. The Central bank increased its key overnight interest rate in December 2015 for the first time since the global financial crisis. The Labor Department said gasoline prices surged 7.0%, up from September's 5.8%, whereas food prices remained unchanged. Within components of the core CPI, rents rose 0.4%, while medical care costs were unchanged. The price of prescription drugs rose 0.2%.
Uneventful end of the week
There are no important fundamental events due on Friday, with exception of the US CB Leading Indicator. The Leading Indicator measures future trends of the overall economic activity including employment, average manufacturing workweek, initial claims, permits for new housing construction, stock prices and yield curve. It is considered as a measure for economic stability in the US. This event generates some volatility for the USD. A number of US officials are also scheduled to speak today. Their speeches could also have some impact on the USD/JPY pair's performance today. However, on the night from Sunday to Monday the Japanese Trade Balance will be released. It is a seasonal measure of balance amount between import and export. A positive value shows a trade surplus, while a negative value shows a trade deficit. Japan is much dependent on exports.USD/JPY continues to edge higher
The US Dollar successfully rallied against the Japanese Yen on Thursday, managing to prolong the ascending channel pattern for another day. According to technical studies, the USD/JPY currency pair is set for another day of gains; however, there is a solid obstacle on the pair's path around 110.70, formed by the Bollinger band, the weekly R2 and the monthly R3. Technically, the Buck has the potential to overcome the immediate supply area and reach the 111.48 level, namely the channel's upper border.Daily chart
Today on the hourly chart the ascending channel pattern is also clearly seen, due to yesterday's confirmation of the lower border and a consequential rebound. A breakout is unlikely to occur today, mainly due to lack of market movers for such a development.
Hourly chart
SWFX traders' sentiment keeps weakening, as 54% of all open positions are short today, compared to 51% on Thursday. Concerning the pending orders, their share increased from 43 to 52% over the past 24 hours.
Meanwhile, there has been an increase in the number of long positions at other brokers. Right now 55% of OANDA clients are bears, compared to 57% on Thursday. In the meantime, Saxo Bank clients are still slightly on the bearish side, being that the portion of shorts takes up 51% 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 18 and November 18, traders expect the US Dollar to appreciate to 107.67 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 51% of all forecasts fall above 108 yen, which is close to the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 111.00 and 112.50 yen in three months, with 26% of the survey participants choosing that trading range. Meanwhile, the second most popular interval is the 105.00-106.50 one, chosen by 19% of all the surveyed, compared to popularity of the 106.50-108.00, 108.00-109.50 and 109.50-111.00 intervals.