- 70% of all pending orders are to buy the Buck
- 55% of all open positions are long
- The nearest significant resistance is around 111.80
- The 111.00 area is a significant support
- Upcoming events: US Existing Home Sales, US Crude Oil Inventories
US homebuilding activity rose slowed unexpectedly last month, official figures revealed on Friday. The Commerce Department reported that housing starts fell 5.5% to a seasonally adjusted annual pace of 1.09M units, the lowest since September 2016, following the preceding month's downwardly revised pace of 1.16M and falling behind analysts' expectations for decline to 1.23M-unit pace. On an annual basis, homebuilding dropped 2.4%. Single-family homebuilding fell 3.9% to a 194K-unit pace in May, the lowest in eight months, after hitting its almost 10-year high in February.
The volatile-family housing sector posted a drop of 9.7% to a 298K-unit pace last month. In the meantime, building permits plunged 4.9% to a pace of 1.17M units during the reported month, compared to the prior month's pace of 1.23M units, whereas analysts anticipated an increase to a 1.25M-unit pace. Despite weak data on homebuilding, analysts suggested that employment would boost home construction in the upcoming months, taking into account the jobless rate at a record low of 4.3% and strong job creation.
Another quiet day
Wednesday does not bring a lot of data, but traders could focus on the US Existing Home Sales, as those provide an estimated value of housing market conditions. As the housing market is considered as a sensitive factor to the US economy, it generates some volatility for the USD. On Thursday, the US Housing Price Index and the Initial Jobless Claims are due, which will also be the only relevant events. The HPI provides an estimated value of housing market conditions and is an important indicator, as the housing market is consider as a sensitive factor to the US economy. As for the Jobless Claims, 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 stuck between 109.22 and 111.80
The resistance encountered at 111.80, namely the monthly PP, was too tough for the USD/JPY pair to bare, resulting in the breach of the recently-acquired up-trend. Being that the pair kept trading between the monthly S1 and the monthly PP, the exchange rate should now keep falling towards the 109.22 area. Technical indicators somewhat support this possibility. No significant developments are expected this week, meaning that with the given rate of decline the most likely weekly close could be 110.00 major level. Moreover, there are no market movers present on the calendar, with the closest potential one scheduled only for June 26. Meanwhile, traders' sentiment also remains relatively neutral, as 55% of all open positions are long.Hourly chart
On the larger timeframe the USD/JPY pair is clearly seen encountering resistance around 111.80, thus, a polarity shift is not a surprise, especially since the monthly PP remains bolstered by the 100-day SMA and the Bollinger band. Once the nearest supports circa 110.70 are pierced, there will be no other significant area to prevent the pair from sliding back down to the expected 110.00 level, and eventually to the monthly S1 at 109.22.
Daily chart
Traders' sentiment remains bullish, with 55% of all open positions being long and the other 45% - short. Meanwhile, there are 70% of all pending orders set to buy the Greenback.
At the moment, 57% of OANDA clients are long the US Dollar against the Yen, while the remaining 43% are short. In addition, Saxo Bank clients' sentiment slightly improved over the day, as 56% of their open positions are now long.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between May 21 and June 21, traders expect the US Dollar to appreciate to 113.33 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 59% of all forecasts fall above 112.50 yen, which is above the current spot price. The majority of people who voted expect the US Dollar to cost somewhere either between 108.00 and 109.50, or between 114.00 and 115.50, or 15.50 and 117.00 or even between 118.50 and 120.00 yen in three months, with 13% of survey participants choosing each of these trading ranges. Furthermore, the 106.50-108.00, the 112.50-114.00 and the 117.00-118.50 ranges were the second most popular ones, with 10% of the voters choosing each of them.