- The share of buy orders remains at 51%
- 62% of traders are short the US Dollar
- Immediate resistance lies at 114.01
- The closest support rests around 113.25
- Upcoming events: US Trade Balance, US Revised Non-farm Productivity, US Factory Orders
The United States' services sector activity hit its one-year high last month, official figures revealed on Monday. The Institute of Supply Management reported its Non-Manufacturing Purchasing Managers' Index advanced to 57.2 in November from the previous month's 54.8 points. The November figure was the highest since October 2015 and marked the 82nd straight month of growth in the sector, while analysts anticipated the Index to come in at 55.3 in the reported month. Any reading above the 50 point level indicates expansion in the services sector, which accounts for more than two-thirds of the US economy.
Furthermore, the Employment Index climbed to 58.2 from October's 53.1 points, showing that hiring rose at a much faster pace in November. The Non-Manufacturing Business Activity Index rose to 61.7 from 57.7 in October, while the New Orders Index dropped to 57.0 from 57.7 and the Prices Index came in at 56.3, losing 0.3 points during November. The majority of respondents expressed a positive view of the economy. Earlier, Markit's final Services PMI for the US came in at 54.6, slightly below the 54.8 point forecast. As a result, the EUR/USD was unchanged at 1.0728, while the GBP/USD fell to 1.2712 from 1.2716 from ahead of the release and the USD/JPY rose from 114.37 to 114.62.
All focus on US fundamentals
All attention is on the US data today, such as the Trade Balance. It is released by the Bureau of Economic Analysis and the US Census Bureau and is a balance between exports and imports of total goods and services. A positive value shows trade surplus, while a negative value shows trade deficit. It is an event that generate some volatility for the USD. If a steady demand in exchange for US exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the USD. Another relevant event will be the Factory Orders. They measure the total orders of durable and non-durable goods such as shipments, inventories and orders at the manufacturing level which can offer insight into inflation and growth in the manufacturing sector. Finally, the Non-farm Productivity, which shows the output per hour of labor worked. Non-farm Productivity indicates the overall business health in the US, which has an influence on GDP.USD/JPY struggles to pierce 23.60% Fibo
The US Dollar was unable to post significant gains against the Yen on Monday, as the 23.60% Fibo once again provided strong resistance and kept the pair below 114.00. The Buck, however, refuses to give up and is on the verge of crossing this area, with focus set on the weekly R1, located at 115.14. Even though technical indicators are in favour of the positive outcome today, downside risks are still present. The closest support, namely the weekly PP, is unlikely to limit the losses should those occur, in which case the USD/JPY pair could freefall towards a possible psychological support of 112.00 or even deeper down—the weekly S1 and 20-day SMA demand zone circa 111.40.Daily chart
Once again the USD/JPY pair remained around the 114.00 major level, unable to edge significantly lower, as the 200-hour SMA kept providing support. The pair appears to be anchored around the 23.60% Fibo level, unable to post substantial gains or to pierce the 200-hour SMA to the downside, however, the apex of this trend is getting closer and some development is soon to occur.
Hourly chart
Once again 62% of traders are short the US Dollar, compared to 59% yesterday. The share of buy orders, however, remains at 51%.
Meanwhile, there has been a decrease in the number of long positions at other brokers. Right now 58% of OANDA clients are bears, compared to 57% on Monday. In the meantime, Saxo Bank clients also remain slightly on the bearish side, being that the portion of shorts takes up 54% of the market.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between November 06 and December 06, traders expect the US Dollar to appreciate to 110.82 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 63% 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 17% of the survey participants choosing that trading range. Meanwhile, the second most popular interval is the 117.00-118.50 one with 12% of the votes, also followed by the 105.00-106.50 and the 112.50-114.00, both chosen by 10% of all the surveyed.