- 60% of all pending orders are to acquire the US Dollar
- 71% of traders are long the Buck
- Immediate resistance lies at 112.70
- The closest support rests at 111.62
- Upcoming events: US Core PCE Price Index, US Personal Spending & Income, Chicago PMI, Michigan Consumer Sentiment
The US economy expanded at a stronger than initially expected pace during the final quarter of 2016 amid higher consumer spending. The Commerce Department reported on Thursday the economy grew at a 2.1% annualised rate in the Q4 of 2016, compared to the previously estimated 1.9% pace. Nevertheless, for all of 2016, the economy expanded just 1.6%, the slowest pace of growth since 2011, following a 2.6% expansion in 2015. Moreover, the most recent economic indicators suggested that economic growth slowed further in the Q1 of 2017. According to the Atlanta Fed, the US economy expanded at a 1.0% rate in the Q1.
However, economists claim that US employment data is more reliable than output data, as it paint a clearer picture of national income growth. Thursday's data also showed consumer spending advanced 3.5% during the last quarter of 2016, up from the initially reporter 3.0% growth rate. Furthermore, domestic demand climbed 3.4% in the Q4 of 2016, the fastest pace of growth in two years, as imports posted a 9.0% jump, the biggest since the Q4 of 2014. Other data released on Thursday revealed that initial jobless claims dropped 3,000 to a seasonally adjusted 258,000 in the week ending March 25, remaining below the 300,000 level for 108 consecutive weeks.
US data in focus again
Once again all focus is on the US fundamentals. First of all, the Core PCE Price Index, which is an average amount of money that consumers spend in a month. "Core" excludes seasonally volatile products, such as food and energy, in order to capture an accurate calculation of the expenditure. It is also a significant indicator of inflation. Second, the US Personal Income. It measures the total income received by individuals from all sources, including wages and salaries, interest, dividends, rent, workers' compensation and transfer payments. This figure can provide insight on the US employment situation. As for Personal Spending, it measure purchases of goods and services by households and by non-profit institutions that serve households from private business.USD/JPY struggles to breach 112.00 handle
The US Dollar successfully outperformed the Yen on Thursday, receiving a boost from a better-than-expected US GDP reading. As a result, the given pair breached two immediate resistances, encountering resistance only in front of the 112.00 level. After such a relatively strong rally a bearish correction is expected. The weekly PP, which is now the nearest support, is unlikely to limit the losses if bears do push the Buck lower. Technical indicators are in favour of the negative outcome, but we should not rule out the possibility of another rally, with fundamental data providing the Greenback with more impetus.Daily chart
The USD/JPY pair formed an ascending channel pattern after approaching dangerously close to the 110.00 mark in the beginning of the week. The 200-hour SMA was unable to stop the rally, allowing the channel pattern to be preserved, which suggests that the Buck is likely to keep outperforming the Yen. The 23.60% Fibo at 114.01 is the main target for now.
Hourly chart
Today 71% of traders are long the Buck (previously 72%), while 60% of all pending orders are to acquire the US Dollar, up from 50% yesterday.
Right now 65% of OANDA clients are bulls, unchanged since Thursday. In the meantime, Saxo Bank clients retain a positive outlook towards the US Dollar, being that 62% of their open positions are now long and the remaining 38% 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 28 and March 31, traders expect the US Dollar to appreciate to 114.97 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 118.50 and 120.00 yen in three months, with 20% of the survey participants choosing this trading range. At the same time, the second most popular intervals were the 106.50-108.00, 117.00-118.50 and the 120.00-121.50 ones, with 12% of survey participants choosing each of them.