- 57% of all pending orders are to sell the US Dollar
- 56% of traders have a negative outlook towards the Buck
- Immediate resistance lies around 118.75
- The closest support rests around 118.08
- Upcoming events: US Building Permits, US Housing Starts, Japanese Trade Balance
US consumer prices rose at a slower pace last month compared with October but the underlying inflation trend remained promising. On Thursday, the US Department of Labor said its Consumer Price Index advanced 0.2% in November after rising 0.4% in the preceding month as food costs moderated and the price of gasoline fell. On an annual basis, the CPI climbed 1.7%, the largest increase since October 2014, following the previous month's 1.6% gain. Analysts expected the CPI grow 0.2% on a monthly basis and 1.7% compared to a year ago in the reported month. Meanwhile, the so-called Core CPI jumped 0.2% in November after climbing 0.1% in October, driven by higher rents. Despite last month's increase, the annual core inflation rate held steady at 2.1%.
Other data released on the same day showed the US Philly Fed Index jumped to 21.5 in November, up from October's 7.6 and well above forecasts of 9.1 points, whereas the Department of Labor reported the number of initial claims dropped 4,000 to 254,000 in the week ending December 10, compared to the preceding week's 258,000. After the release, the US Dollar was seen trading at 1.0419 against the Euro, 117.99 against the Japanese Yen and 1.2470 against the British Pound.
US Building Permits is the only significant event
On Friday there is only one relevant event to influence the USD/JPY, namely the US Building Permits. Released by the US Census Bureau, it shows 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. Normally, the more growing number of permits, the more positive it is for the USD.USD/JPY attempts to edge higher again
The USD/JPY currency pair did tough the second resistance cluster, as was anticipated, but also managed to stabilise above the 118.00 level, beating expectations. The Greenback is now likely to experience another small rally, with the Bollinger band serving as an immediate support and keeping the pair afloat above 118.00. At the same time, the resistance levels around 118.75, namely the weekly R3 and the monthly R1, is to prevent the US Dollar from climbing over the 119.00 mark and, thus, limit any substantial gains. Technical indicators are also in favour of the positive outcome today.Daily chart
A rebound from the up-trend on Wednesday was sufficient for the USD/JPY pair to retain its bullish momentum on Thursday, successfully reclaiming the 118.00 level. However, a setback could occur today, but for the moment the trend is expected to remain bullish until the 126.00 level is eventually reached.
Hourly chart
There are 56% of traders with a negative outlook towards the Buck, compared to 57% on Thursday. Meanwhile. 57% of all pending orders are to sell the US Dollar, down from 59% yesterday.
Meanwhile, there has been an increase in the number of long positions at other brokers. Right now 53% of OANDA clients are bears, compared to 56% on Thursday. In the meantime, Saxo Bank clients are equally divided between the bulls and the bears, being that the portion of shorts and longs each take up 50% 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 16 and December 16, traders expect the US Dollar to appreciate to 114.58 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 57% of all forecasts fall above 114 yen, which is close to the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 117.00 and 118.50 yen in three months, with 15% of the survey participants choosing this trading range. Meanwhile, the second most popular intervals are the 111.00-112.50 and the 118.50-120.00 ones, with 11% of the votes each, also followed by the 112.50-114.00, 115.50-117.00 and the 120.00-121.50 intervals, chosen by 10% of all the surveyed.