- The share of buy orders inched up from 51 to 53%
- 62% of all open positions are long
- The nearest resistance is located around 105.05
- The closest support rests at 103.80
- Upcoming events: US CPI and Core CPI, NAHB Housing Market Index
Industrial production in the United States rose less than expected last month, suggesting the economy grew at a moderate annual pace in the Q3. The Federal Reserve revealed on Monday the country's industrial output advanced 0.1% in September, compared to the preceding month's downwardly revised fall of 0.5%, while market analysts anticipated a rebound of 0.3% in the reported period. On an annual basis, industrial production increased 1.8% in the Q3, marking the first quarterly rise since the Q3 of 2015. Manufacturing output as well as mining output rose 0.2% and 0.4% in September, respectively, while utilities output fell 1.0% in the same month.
The industrial sector was badly hurt by the strengthening US Dollar and surging price of oil between June 2014 and December 2015. Also, it was hampered by businesses' efforts to reduce an inventory overhang. However, the recent stabilization of the US Dollar and oil prices suggest a significant rebound in industrial production. In addition, capacity utilization declined to 75.4% during the ninth month of the year, down from last month's 75.5% reading, while economists anticipated a slight increase to 75.6% during the reported period.
US CPI and NAHB Housing Market Index
The most important event on Tuesday is the US CPI. It is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. The "Core" CPI excludes seasonally volatile products, such as food and energy, in order to capture an accurate calculation. Another relatively important reading from the US side is the NAHB Housing Market Index. It presents home sales and expected home buildings in the future indicating housing market trend in the United States. The growth rate of the housing market affects the USD volatility.USD/JPY attempts to trim Monday's losses
Although the US Dollar edged lower against the Yen on Monday, the three-week bullish trend remained intact. A rally is expected today, as it would reconfirm the trend for the time being. The USD/JPY pair also opened just on top of a relatively strong support area, formed by the weekly PP and the monthly R1, which demand is sufficient to cause a recovery after yesterday's loss. Moreover, technical indicators keep giving bullish signals in the daily timeframe, also suggesting a rally is due. In this case specifically the Bollinger bands remain in favour of the bullish trend, but the nearest resistance around the 105.00 psychological level is likely to remain out of reach.Daily chart
Friday ended with the USD/JPY currency pair edging higher again, also reconfirming the three-week up-trend. The pair continues to test the trend-line, but with risks somewhat slewed to the downside due to a breach attempt on Thursday. The 200-hour SMA is expected to hold, but a second full-blown breach of the trend-line would imply that bears are likely to eventually take over.
Hourly chart
There are 62% of all open positions being long today (previously 63%), while the share of buy orders inched up from 51 to 53%.
Meanwhile, there has been no change in the number of long positions at other brokers. Right now 54% of OANDA clients are bulls. Saxo Bank clients, however, are slightly more bullish than on Monday, being that the portion of longs now 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 18 and October 18, traders expect the US Dollar to appreciate to 104.67 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 77% of all forecasts fall above 102 yen, which is close to the current spot price. By far the most popular interval is 108.00-109.50, chosen by 18% of all the surveyed, compared to popularity of the 105.00-106.50, 106.50-108.00 and 109.50-111.00 intervals.