- The share of buy orders slid from 77 to 64%
- Market sentiment remains bullish at 60%
- The Bollinger band represents resistance around 103.38
- The closest support rests at 102.84
- Upcoming events: US ADP Non-Farm Employment Change, US Trade Balance, US ISM Non-Manufacturing PMI, US Factory Orders, US Crude Oil Inventories
Manufacturing activity in the United States rebounded in September after a disappointing August report, official data showed on Monday. The Institute for Supply Management said its Index of manufacturing activity advanced to 51.5 in September, following the previous month's 49.4, while market analysts pencilled in a 1.0 point-acceleration to 50.4 in the reported month. Back in August, manufacturing output contracted for the first time since February of this year, as only six out of 18 industries reported growth. A number below 50 points indicates contraction in the US manufacturing sector, while a number above indicates improving conditions.
Furthermore, the New Orders Index rose to 55.1 the Employment Index jumped to 49.7 in September from last month's 49.1 and 48.3, respectively, while the Price Paid Index remained unchanged at 53.0, in line with analysts' expectations. The data indicated that nine of the 18 industries reported a rise in new orders, while 10 of the 18 industries reported an increase in production last month. After the release, the US Dollar rose against other major currencies, trading at 1.1217 against the Euro, 1.2833 against the Sterling and 101.44 against the Japanese Yen. Meanwhile, the US Dollar Index rose 0.25% to 95.694.
US ADP Non-Farm Employment Change, US Services PMI and US Factory Orders
Today a number of US-relevant events are due, such as the US ADP Non-Farm Employment Change. It is a measure of the change in the number of employed people in the US. Generally speaking, a rise in this indicator has positive implications for consumer spending, stimulating economic growth. Another important data release will be the US Non-Manufacturing PMI. It captures business conditions in the services sector. As the services sector dominates a large part of total GDP, the services PMI is an important indicator of the overall economic condition in the US. Finally, the US Factory Orders, which are a measure of the total orders of durable and non-durable goods, such as shipments (sales), inventories and orders at the manufacturing level, which can offer insight into inflation and growth in the manufacturing sector.USD/JPY in limbo ahead of ADP data
Some hawkish comments from the Fed caused the Greenback to add more than 120 pips against the Yen yesterday, nearly managing to retake the 103.00 mark. Even though technical indicators are no longer giving bearish signals, a possibility of bears taking over still exists. Nonetheless, a tough support cluster around the 102.00 major level is more than capable of handling any bearish development, while gains could potentially extend towards 103.75, where the monthly R1 coincides with the weekly R3 and the 100-day SMA. Moreover, the 104.00 level also represents significant psychological resistance, which remained intact for more than two months now.Daily chart
Yesterday's rally caused the descending channel's resistance line to be broken, with gains limited only at 103.00. A lot depends on today's fundamental data, as it will provide insight to Friday's NFP, which is the main anticipated event this week. Technically, due to the channel's breach more bullish momentum should come.
Hourly chart
Although not as strong as yesterday, but market sentiment remains bullish at 60%. The share of buy orders, however, slid from 77 to 64%.
Meanwhile, there has been a decrease in the number of long positions at other brokers. Right now 57% of OANDA clients are bulls, compared to 64% on Tuesday. Saxo Bank clients, however, remain as bullish as on Tuesday, being that the portion of longs still takes up 57% of the market.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between September 05 and October 05, traders expect the US Dollar to appreciate to 105.03 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 74% of all forecasts fall above 102 yen, which is close to the current spot price. By far the most popular intervals are 102.00-103.50 and 108.00-109.50, both chosen by 16% of all the surveyed, compared to popularity of the 105.00-106.50, 106.50-108.00 and 109.50-111.00 intervals.