- 55% of traders have a positive outlook towards the US Dollar
- The number of orders to acquire the Greenback inched up from 55 to 57%
- Immediate resistance lies circa 113.30
- The closest support rests around 112.89
- Upcoming events: US Manufacturing PMI, US Services PMI
US building permits advanced more than expected whereas homebuilding activity weakened in January, official figures revealed on Thursday. The Commerce Department reported building permits rose 4.6% to a seasonally adjusted annual pace of 1.29 million in January, following the previous month's upwardly revised 1.23 million units and surpassing analysts' expectations for a 1.23 million-unit rate. The increase caught markets by surprise, as the figure reached the highest level since November 2015, suggesting solid growth in starts in the middle of 2017.
Meanwhile, housing starts declined 2.6% to an annualised rate of 1.25 million units in the same month, following December's upwardly revised reading of 1.28 million, whereas economists expected them to increase to a 1.23. Analysts suggest that the housing market recovery is likely to be sustained by strong labor market, which supported household formation. Separately, the Philadelphia Federal Reserve said its Manufacturing Index jumped to 43.3 points in February, the highest level in 33 years, driven by a jump in new orders, which climbed to 38.0 from 26.00. Data also showed the Employment Index fell to 11.1 from 12.8, while the Business Outlook Index for the next six months slid to 53.5 points.
US Services and Manufacturing PMIs due on Tuesday
There are no important upcoming events on Friday and Monday will also be a quiet day, leaving us with Tuesday. On Tuesday the most impact is likely to be from the US fundamentals, namely the Services PMI and the Manufacturing PMI. The Services PMI captures business conditions in the services sector. As the services sector dominates a large part of total GDP, the services PMI is an important indicator of the overall economic condition in the US. The Manufacturing PMI, however, captures business conditions in the manufacturing sector. It is an important indicator of business conditions and the overall economic condition in the US, also taking up a significant part of total GDP.USD/JPY in limbo around 113.20
The US Dollar failed to outperform the Japanese Yen on Thursday, despite upbeat US fundamentals. Investors took profit of the recent rally, causing the Buck to erase Monday's and Tuesday's gains. The pair remains on the back foot, risking to drop under the 113.00 major level today, with the weekly pivot point at 112.89 acting as the closest support. Contrariwise, a technical correction could occur after yesterday's relatively sharp decline, with the interim target still being the 115.00 mark, where the upper Bollinger band, the 55-day SMA and the weekly R2 form a tough supply area.Daily chart
As was expected, the 200-hour SMA failed to provide support, as it acts better as a resistance. Consequently, the USD/JPY pair began sliding further down, with the main target now being the 111.70 level – where a rebound initiall occurred two weeks ago.
Hourly chart
There are now 55% of traders with a positive outlook towards the US Dollar today (previously 56%). At the same time, the number of orders to acquire the Greenback inched up from 55 to 57%.
Right now 54% of OANDA clients are bulls, compared to 53% on Thursday. In the meantime, Saxo Bank clients remain on the bullish side, being that 57% of their open positions are now long and the remaining 43% 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 17 and February 17, traders expect the US Dollar to appreciate to 114.04 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 52% 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 between 106.50 and 108.00 yen in three months, with 16% of the survey participants choosing this trading range. At the same time, the second most popular intervals were the 111.00-112.50, 117.00-118.50 and the 120.00-121.50 ones, with 11% of survey participants choosing each of them.