- The number of buy orders decreased from 58 to 56%
- Now 71% of traders are long the Buck
- 17% of traders expect the US Dollar to cost either between 121.50-123.00 or 123.00-124.50 yen in three months
- Nearest resistance rests around 119.20, represented by the weekly PP and the 100-day SMA, while closest support lies at 118.30, the Bollinger band and the weekly and monthly S1s
- Upcoming events: US MBA Mortgage Application, US Core Personal Consumption, US GDP Annualized, US GDP Price Index, US Personal Consumption Expenditures Prices, US Pending Home Sales, US Fed Interest Rate Decision
US consumer confidence unexpected fell this month amid a slowdown in job creation and concerns about near-term economic outlook. According to the Conference Board, its index of consumer confidence slumped to the lowest level in four months at 95.2 in April, down from a revised 101.4 in the previous month, which had been originally reported as 101.3. In contrast, market expectations were for the index to inch slightly higher to 102.6. The present situation index, a gauge that shows consumers' assessment of current economic conditions, plunged to 106.8 from a revised 109.5, first reported at 109.1. Consumer expectations for economic activity over the next six months plunged to 87.5 from 96.0.
Americans said jobs were less plentiful after payrolls increased in March at the slowest pace in more than a year. The survey revealed 19.1% of consumers in April thought jobs are "plentiful," compared with 21% in March. Another 26.4% described jobs as "hard to get," up from 25.5% last month. The share of respondents expecting more jobs will be created in the next six months declined to 13.8% this month from 15.3% in March. The Commerce Department's GDP report later today is forecast to show first-quarter personal consumption rose at the slowest pace in a year. Monthly data on retail sales indicated the uneven nature of consumer spending.
Stephen Pope, a managing partner, gives his opinion about the current situation concerning the Bank of Japan. He says that if you want to find any shock revelations about what the BoJ are up to, one actually has to start digging quite deeply into the data. Stephen comments that the data a lot of data mining is required, because at the current time it is uncertain whether the Abenomics, the Three Arrows, are really working. He also adds that "there has been a lot of pressure from the Government on the BoJ to be a heavy intervention machine, so almost sacrificing their independence in order of making Abenomics work and pushing Japan forward."
Craig Erlam, Senior Market Analyst at OANDA, commenting on the prospects of the Fed raising interest rates this year, said that there is no real difference between the Fed raising rates either in June or in September. In his opinion September just seems more likely, because it gives the Fed more time to prepare for the hike. Craig also does not see the immediate necessity for a rate hike in September, but thinks that "there is just a number of policymakers who want to test the water with the first hike, see how the markets react, how economy holds up."
US Fed Interest rate and Annualized GDP
There is a Bank Holiday today in Japan, thus, there will be no data release until Thursday. Nevertheless, the two mains events today concern the US economy. The US economy has been losing momentum and the Bureau of Economic Analysis is forecasting another slowdown of economic growth. Moreover, the Fed is anticipated to hold interest rate at 0.25%. A lot depends on whether the Fed will decide to hike interest rates in June or September. If we have any indication concerning a June hike, the US Dollar will suffer losses, also pressured by the slower GDP growth.
Marcel Thieliant, economist from Capital Economics, forecasts USD/JPY to be at 130.00 by the end of the second quarter. The analyst commented that he expects the BoJ to step up the pace of easing at the end of this month. "This is obviously not what other economists expect, if that happens, we will probably see a strong drop in the Yen against the Dollar and against other major currencies," he said.
USD/JPY marches to 118
The US Dollar dropped down versus the Japanese Yen on Tuesday. The resistance cluster at 119.20 proved to be resilient enough to prevent the USD/JPY pair from advancing. As a result, the Greenback bounced back and lost 30 pips. On Wednesday, we expect the Buck to extend its decline, while technical studies are giving mixed signs. Immediate support is located around 118.30, represented by the Bollinger band and the weekly and monthly S1s. This cluster should prevent the pair from falling too deep or reaching the 118 level today.
Daily chart
After rather heavy losses, the Greenback attempted to regain momentum on Monday, but failed. The resistance trend-line forced the USD/JPY pair to drop back down. Since then, the US Dollar was moderately falling parallel to the trend-line, until now. The pair is edging closer to the resistance and will attempt to break through; however, the fundamental data today is likely to prevent that from happening.
Hourly chart
Market sentiment remains bullish
Market sentiment slightly worsened, as the share of bulls lost one percentage point. Now 71% of traders are long the Buck. The number of buy orders also decreased, from 58 to 56%.
Market sentiment of OANDA's traders remains unchanged, with 66% of all positions being long. Meanwhile, SAXO Group has even more traders with a bullish outlook towards the USD/JPY, with 76% of all positions now long (previously 73%).
Spreads (avg, pip) / Trading volume / Volatility
17% of traders expect the US Dollar to cost either between 121.50-123.00 or 123.00-124.50 yen in three months
The mean forecast for July 29 is 120.89. The vast majority of the survey participants (61%) still expect the Greenback to cost more than 120 yen. The most popular choice was divided between 121.50-123.00 price interval and 123.00-124.50, both selected by 17% of traders. The second popular price range, 117.00-118.50, was selected by only 12% of the surveyed.
Compared to the previous week the bearish sentiment strengthened, as now 60% of traders expect the pair to loose, comparing to the 57% of bearish votes in the previous release. As a result, the average median for the pair decreased to 119.1.
Soladood, a trader with a bullish perspective towards the USD/JPY currency pair, suggests that the daily chart shows the pair at the sideways mode and that it is drifting higher from the current level. Another community member, AAARated, expects the Greenback to decline versus the Yen. He said that "the USD/JPY has failed to stay above 121.50 and it stays around the key support level of 118.50-118.66 on the daily chart." AAARated also mentioned that if the pair breaks the support level, it will head downwards to the first support at 117.50.