- 60% of all pending orders are to sell the Greenback
- 57% of all open positions are short
- Immediate resistance lies around 116.50
- The closest support rests around 114.60
- Upcoming events: US Import Prices, Japanese Industrial Production
Mood of American shoppers improved markedly in December, following Donald Trump's surprise victory in the US presidency elections, official figures revealed on Friday. The University of Michigan reported its preliminary Consumer Sentiment Index jumped to 98.0, the highest reading since January, while marked analysts anticipated a slighter improvement to 94.3 from November's 93.8 points. Confidence among consumers rose shortly after the elections. The Current Conditions Index, which measures the way consumers feel about the present state of the economy, advanced to 122.1 in December from the preceding month's 117.3 points, the highest level since 2005. A record number of survey respondents pointed to the positive effects of new policies.
Furthermore, the survey showed the proportion of people expecting the economy and labor market to improve next year also increased in the reported month. The gauge of expectations six months from now climbed to 88.9, the highest since January 2015, following the prior month's 85.2 points. Consumers' inflation expectations for the next year declined to 2.3%, the lowest level since 2010, compared with November's 2.4%, while their expectations for inflation over the next 10 years fell to 2.5% from 2.6%.
Relatively quiet day ahead of the FOMC Minutes
There are not many events ahead of the FOMC Meeting Minutes on Wednesday. Today attention could be paid to the US Import Price Index, which informs the changes in the price of imported products into the US. The higher the cost of imported goods, the stronger the effect they will have on inflation, redunding in a higher probability of a rate rise. Additionally, the Japanese Industrial Production could have some impact. It measures outputs of the Japanese factories and mines. Changes in Industrial production are widely followed as a major indicator of strength in the manufacturing sector.USD/JPY to remain under 116.00
Despite the USD/JPY pair being supported by a strong demand area, bears still managed to push the pair lower on Monday. However, the four-week up-trend is only closer now, implying that the bullish momentum is likely to be regained. Technical studies both in the daily and the weekly timeframes support the possibility of a rally. The closest resistance is located only around 116.50, leaving sufficient space for a strong rally. On the other hand, there are no solid market drivers present today that could trigger such a substantial upside movement; thus, the Buck is expected to remain between 115.00 and 116.00.Daily chart
The 116.00 mark was touched yesterday, but resistance there was sufficient to trigger a U-turn. Nevertheless, the US Dollar is still expected to outperform the Japanese Yen and make its way back up, crossing the 116.00 threshold eventually.
Hourly chart
Bears keep losing numbers, as 57% of all open positions are short today, compared to 60% on Monday. As for the pending orders, 60% of them are to sell the Greenback, just one percentage point more.
Meanwhile, there has been an increase in the number of long positions at other brokers. Right now 53% of OANDA clients are bears, compared to 60% on Monday. In the meantime, Saxo Bank clients also remain 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 November 13 and December 13, traders expect the US Dollar to appreciate to 113.18 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 72% of all forecasts fall above 111 yen, which is close to the current spot price. The majority of people voted expect the US Dollar to cost somewhere either between 111.00 and 112.50 or between 117.00 and 118.50 yen in three months, with 13% of the survey participants choosing this trading range each. Meanwhile, the second most popular intervals are the 118.50-120.00 and the 112.50-114.00 ones, with 10% of the votes each, also followed by the 109.50-111.00, 114.00-115.50 and 115.50-117.00 and 120.00-121.50, each chosen by 8% of all the surveyed.