- The number of purchase orders increased from 61 to 76%
- 68% of all open positions are long
- Resistance rests around 102.60
- The weekly PP and the 20-day SMA around 100.15 represents immediate support
- 64% of the survey participants expect the US Dollar to cost less than 105.00 yen in three months
- Upcoming events: US Core PCE Price Index, US Personal Spending and Income, Japanese Household Spending, Japanese Retail Sales, Japanese Unemployment Rate
The US economy expanded less than initially estimated in the Q2 of 2016, fresh data revealed on Friday. According to the second estimate released by the Commerce Department, the US GDP grew 1.1% over the Q2, whereas the first estimate suggested that the economy rose 1.2% in the reported quarter; however, the reading came in line with market forecasts. The US economy grew 0.8% in the Q1 and 1.0% in the first half of 2016. The downward revision was mainly driven by higher imports and weak spending by state and local governments. Meanwhile, Personal consumption growth was revised up to 4.4% from 4.2% reported earlier, the fastest pace since the Q4 of 2014. The data showed that corporate profits dropped 1.2% in the Q2, following the 3.4% gain seen in the Q1. Core personal consumption expenditures, which exclude volatile food and energy prices, rose to 1.8% from 1.7%.
Separate data released by the Commerce Department showed the US trade deficit fell to a seasonally adjusted $59.3 billion last month, compared to June's $64.5 billion gap, whereas market analysts anticipated a slight drop to $62.3 billion in July. Exports jumped $2.9 billion, while imports declined $2.4 billion. Wholesale inventories rose 0.2% month-over-month and 0.3% year-over-year. Retail inventories fell 0.4% on a monthly basis, but increased 4.2% on an annual basis.
US data are the main driver on Monday
All attention turns to the US data again, although some Japanese Data will be out later to set the trading mood for Tuesday. 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 a significant indicator of inflation. Second, the Personal Income, which measures the total income 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. Finally, the Personal Spending, which measures purchases of goods and services by households and by non-profit institutions that serve households from private business.USD/JPY to remain above 102.00
The Greenback strengthened across the board on Friday, triggered by Fed Yellen's surprisingly hawkish statement that day. As a result, the USD/JPY currency pair surged more than 130 pips, while also opening above the 102.00 major level today. A bearish development today is unlikely, but possible, as technical indicators are unable to provide a clear sense of direction. A strong rally is to be limited by the cluster circa 103.60, represented by the weekly R1 and the Bollinger band, whereas the nearest support rests only around 101.20. However, in case the immediate resistance fails to keep the US Dollar at bay, the second resistance area around 103.15 is expected to succeed.Daily chart
The USD/JPY currency pair put the two-week up-trend to the test on Friday, confirming it and receiving a strong boost by other factors. Right now the Buck has the potential to keep climbing higher until the descending channel's resistance line at around 103.70 is reached.
Hourly chart
Today 68% of all open positions are long (previously 70%). At the same time, the number of purchase orders increased from 61 to 76%.
Sentiment at Saxo Bank is virtually the same - 63% of the Denmark-based clients are currently holding long positions. Traders at OANDA are slightly less confident in Dollar's appreciation - as many as 70% of open positions are long. Using the data as a contrarian indicator, the sentiment implies a cheaper Dollar. There is little room for new buyers to enter the market, and if the bulls start closing positions on profit-taking, this could create a strong selling pressure.
Spreads (avg, pip) / Trading volume / Volatility
More than a half expect the exchange rate to fall below 105.00 yen
Slightly more than half of the surveyed (64%) now assume that the US Dollar is to cost less than 105.00 yen after a three month time. The most popular choice, however, implies that the Greenback is to cost between 108.00 and 109.50 yen in three months, selected by 18% of the voters. According to the votes collected between July 29 and August 29, the mean forecast for November 29 is 103.13. At the same time, 11% of the surveyed believe the Greenback could cost either between 99.00 and 105.50 yen, between 102.00 and 103.50 yen, between 103.50 and 105.00 yen or even more than 109.50 yen in three months.