- The share of sell orders surged from 49 to 57%
- Bulls take up only 49% of the market
- Immediate resistance lies at 109.53
- The closest support rests around 108.50
- Upcoming events: US Building Permits, US CPI and Core CPI, Philadelphia Fed Manufacturing Index, US Initial Jobless Claims, US Housing Starts, Fed Chair Yellen's Testimony
US industrial production remained unchanged unexpectedly last month, amid the weak heating demand. According to the Federal Reserve, the country's industrial output was flat on a seasonally adjusted basis in October, following the preceding month's downwardly revised fall of 0.2%. However, market analysts anticipated a slight increase of 0.2% in the reported month. Utilities production declined 2.6% last month, after dropping 3.0% in September. The Fed said milder weather than normal reduced the demand for heating during October, offsetting gains of 0.2% and 2.1% in the manufacturing and mining categories, respectively. Data also showed that capacity utilization fell 0.1% to 75.3%.
Separately, the US Department of Labor said its Producer Price Index came in at 0.0% in October, whereas economists expected the Index to advance 0.3% as in the prior month. Nevertheless, on an annual basis, the PPI rose 0.8%, the largest increase since December 2014, compared to September's gain of 0.7%. In the meantime, the Energy Information Administration reported on Wednesday that US crude oil inventories increased to a seasonally adjusted rate of 5.3 million barrels in the week ended November 11, following the previous week's rise of 2.4 million barrels.
Another day of US fundamentals
Another day with no significant fundamentals from the Japanese side, thus, all attention turns to the US data once more. From the US side the most important figure will be the CPI. The CPI 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. In Core CPI the volatile products, such as food and energy, are excluded in order to capture and accurate calculation. Another relevant event will be the Building Permits, which show the number of permits for new construction projects. It implies the movement of corporate investments (US economic development). It tends to cause some volatility to the USD. Going further is the Philadelphia Fed Manufacturing Survey, which is a spread index of manufacturing conditions within the Federal Reserve Bank of Philadelphia. This survey, served as an indicator of manufacturing sector trends, is interrelated with the ISM Manufacturing Index and the Index of Industrial Production. It is also used as a forecast of the ISM Index.USD/JPY to preserve the channel pattern
The Greenback failed to preserve its gains against the Japanese currency on Wednesday, ultimately closing with a several-pip decline. Nevertheless, the ascending channel pattern remains intact, with the channel's lower boundary, the weekly R1 and the monthly R2 forming immediate support circa 108.60. Meanwhile, the upper Bollinger band is the closest resistance, but is unlikely to prevent the USD/JPY pair from appreciating further. The main target is the cluster around 110.80, represented by the pattern's upper border, the weekly R2 and the monthly R3, which also remains out of reach, despite technical studies bolstering the possibility of the positive outcome today.Daily chart
By the end of the day yesterday the US Dollar breached the possible support line, which brings risks to the outlook of the daily chart, where there are signs of further USD/JPY upward momentum. The pair remains relatively flat, suggesting that investors are awaiting for the fundamental data to begin buying or selling.
Hourly chart
Bulls and bears broke out of equilibrium, taking up 49% and 51% of the market, respectively. The share of sell orders surged from 49 to 57%.
Meanwhile, there has been another decrease in the number of long positions at other brokers. Right now 57% of OANDA clients are bears, compared to 53% on Wednesday. In the meantime, Saxo Bank clients are also turned bearish today, being that the portion of shorts now takes up 52% of the market.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between October 17 and November 16, traders expect the US Dollar to appreciate to 107.71 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 62% of all forecasts fall above 108 yen, which is close to the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 111.00 and 112.50 yen in three months, with 27% of the survey participants choosing that trading range. Meanwhile, the second most popular interval is the 105.00-106.50 one, chosen by 17% of all the surveyed, compared to popularity of the 106.50-108.00, 108.00-109.50 and 109.50-111.00 intervals.