- The number of orders to purchase the Greenback inched up from 54 to 57%
- 60% of all open positions are long
- Immediate resistance lies around 114.50
- The closest support rests around 113.30
- Upcoming events: US ADP Non-Farm Employment Change, US Revised Non-Farm Productivity, US Revised Unit Labor Costs
The Japanese economy expanded at a stronger than initially reported pace in the last quarter of 2016, due to upward revisions in business spending and business investment. The Cabinet Office reported on Wednesday the economy grew at an annualized pace of 1.2% in the Q4 of 2016, up from the preliminary reading of 1.0%. However, the figure missed analysts' expectations, who anticipated growth at 1.6%. On a quarterly basis, Japan's GDP climbed 0.3%, above the 0.2% preliminary reading, yet below consensus estimates of a 0.4% rise. Fresh data confirmed the presence of serious challenges, faced by Japan's policymakers. Even though the Japanese economy reported growth for four consecutive quarters, marking the longest stretch in three years, business investment and consumption remained subdued.
The Bank of Japan's former board member Sayuri Shirai said that the corporate sector was "very cautious of making an investment" amid uncertainties in both global and local economy. Shirai served at the BoJ's Policy Board from April 2011 to March 2016 and supported the QQE programme in 2013 and 2014. However, back in January 2016, she voted against negative interest rates. Data showed capital expenditure advanced 2.0% quarter-over-quarter in the Q4, surpassing expectations for a 1.7% climb and following the preliminary figure of 0.9%.
US ADP Employment Change is the only event worth paying attention to today
Wednesday is a somewhat quiet day, but still, today the ADP Non-Farm Employment Change is due. It is a measure of the change in the number of employed people in the US. A rise in this indicator has positive implications for consumer spending, stimulating economic growth. Another event will be the Non-Farm Productivity, which shows the output per hour of labor worked. Non-Farm Productivity indicates the overall business health in the US, which has an influence on GDP.USD/JPY: no significant developments expected
On Tuesday, the USD/JPY pair remained relatively unchanged again, unable to reclaim the 114.00 major level. Even if this mark is overcome, the Buck is still unlikely to appreciate beyond 114.50, as the ascending channel's resistance line is located there, also bolstered by the 55-day SMA, the monthly R1 and the upper Bollinger band. Technical indicators are also in favour of the positive outcome, but today's ADP Employment data could turn the tide for the US Dollar, causing it to fall to around 113.30. A flat outcome would also not be a surprise, as the main focus is still on Friday's NFP data this week.Daily chart
The US Dollar keeps gravitating towards the 114.00 major level, with the USD/JPY pair being rather volatile today. Another retest of the down-trend is possible, which would confirm the daily outlook, as gains are expected to be limited around that area.
Hourly chart
Today 60% of all open positions are long, compared to 61% on Tuesday. At the same time, the number of orders to purchase the Greenback inched up from 54 to 57%.
Right now 52% of OANDA clients are bulls, compared to 51% on Tuesday. In the meantime, Saxo Bank clients retain a positive outlook towards the US Dollar, 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 February 08 and March 08, traders expect the US Dollar to appreciate to 114.42 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 60% 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 114.00 and 115.50 yen in three months, with 18% of the survey participants choosing this trading range. At the same time, the second most popular interval was the 106.50-108.00, with 15% of survey participants choosing it.