- The portion of buy orders remains unchanged at 62%
- 65% of all open positions are long
- Immediate resistance lies at 113.19
- The closest support rests circa 111.50
- Upcoming events: US Initial Jobless Claims, US Wholesale Inventories, US Import Prices, US Federal Budget Balance
The US trade deficit dropped more than expected in December after two straight months of increases amid higher exports. The Commerce Department reported the country's trade gap narrowed 3.2% to $44.3 billion in the reported month, following November's upwardly revised deficit of 45.7 billion, while market analysts held expectations for a decrease to $45.0 billion. The December improvement was driven by stronger exports that posted a 2.7% monthly increase to $190.7 billion, the highest level since April 2015. Advanced technology goods were the main contributor to export growth.
However, US exports remained under pressure from the strong Dollar, which rose 4.4% against other major currencies in 2016. The data showed shipments to the EU climbed 10.1%, with exports to Germany advancing 12.4%. The US President Donald Trump accused the EU's largest economy of using the weak Euro to exploit the US. Meanwhile, imports of goods and services jumped 1.5% to $235.0 billion in December, the highest since March 2015. The key drivers of import growth were attributable to higher oil prices and stronger domestic demand. Separately, the JOLTS monthly report released on Tuesday showed job opening in the US totalled 5.50 million in December, slightly down from November's revised 5.51 million and below a 5.56 million market forecast.
Jobless Claims due tomorrow
This whole weak is quiet in terms of fundamental data releases, leaving the main ones to be released on Friday. From the US side attention could be paid to the Import Price Index. It 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. On Thursday, however, some impact could be anticipated from the Initial Jobless Claims, as they are a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labor market. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy.USD/JPY gravitates towards 112.00
A technical correction has been registered yesterday, causing the USD/JPY to almost completely erase Monday's losses. The pair, however, still remains in a bearish trend, where it traded for more than two months now. Further bullish developments could last until the 113.00/50 area is reached, as that is where the exchange rate could retest the bearish trend-line. Nevertheless, technical indicators suggest the US Dollar is to weaken against the Yen today, as they are now giving bearish signals. In this case, the area around 111.50, represented by the Bollinger band and the weekly S1 is likely to provide sufficient support if reached.Daily chart
The USD/JPY pair remains under the 200-hour SMA, where resistance keeps preventing the Buck from regaining the bullish momentum. However, a successful attempt to climb over the given SMA does not mean the bullish trend is to be regained, as the pair is also required to pierce the trend-line 50 pips above the SMA.
Hourly chart
Today 65% of all open positions are long, up from 59% on Tuesday. At the same time, the portion of buy orders remained unchanged at 62%.
Right now 52% of OANDA clients are bulls, compared to 54% on Tuesday. In the meantime, Saxo Bank clients remain on the bullish side, being that 58% of their open positions are now long and the remaining 42% 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 08 and February 08, traders expect the US Dollar to appreciate to 114.62 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 66% of all forecasts fall below 117 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere either between 111.00 and 112.50 yen or between 120.00 and 121.50 yen in three months, with 16% of the survey participants each choosing these trading ranges. At the same time, the second most popular intervals were the 106.50-108.00 and the 115.50-117.00 ones, with 12% of survey participants each choosing them.