- 60% of all pending orders are to buy the USD
- 53% of traders have a positive outlook towards the Buck
- Immediate resistance lies at 112.94
- The closest support rests around 112.37
- Upcoming events: US Existing Home Sales, US Markit Manufacturing PMI
US homebuilding activity advanced more than expected in the last month of 2016, official figures revealed on Thursday. The Commerce Department reported housing starts rose 11.3% to a seasonally adjusted annual pace of 1.23 million in December, following the previous month's upwardly revised 1.10 million units and surpassing analysts' expectations for a 1.19 million-unit rate. The December increase suggested the housing market boosted economic growth in the Q4. Meanwhile, building permits came in at a seasonally adjusted annual pace of 1.21 million units in the same month, unchanged from November's upwardly revised reading, slightly missing economists' projections of a 1.22 million-unit rate.
Separately, the Philadelphia Federal Reserve said its Manufacturing Index jumped to 23.6 points in January, the highest level in more than two years, driven by a rise in new orders, which climbed to 26.0 from 14.90. Analysts anticipated a sharp fall to 16.2 points in January from the prior month's 21.5. Data also showed the Employment Index surged to 12.8 from 3.6, while the Business Outlook Index for the next six months hit its highest level since August 2014 of 56.6 points. Other data released on Thursday showed initial jobless claims fell 15,000 to 234,000 last week, the lowest level in more than 43 years.
US Existing Home Sales and Markit Manufacturing PMI
Today traders can focus on the US Markit Manufacturing PMI, which captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the Manufacturing PMI is an important indicator of business conditions and the overall economic condition in the US. Another possible event to pay attention to will be the US Existing Home Sales, as they provide an estimated value of housing market conditions. As the housing market is considered as a sensitive factor to the US economy, it generates some volatility for the USD.USD/JPY: bearish trend intact
The US Dollar's relatively sharp decline against the Japanese Yen yesterday caused the bearish trend to be reconfirmed. The pair lost 159 pips during Monday, edging closer to its eight-week low; with this psychological support the Greenback has the potential to erase some of yesterday's losses. The supply cluster around 114.00 is likely to limit any substantial gains, as the four-week down-trend rests there, also being reinforced by the monthly S1, the weekly PP and the 55-day SMA. Meanwhile, technical indicators keep giving bearish signals, suggesting the Buck could fall deeper down if Yen's safe-haven status triggers demand.Daily chart
The USD/JPY currency pair continued to fall on Monday, with the 112.53 level being the bottom. At this point the Buck found sufficient support to begin its recovery, but it is uncertain whether it will manage to climb over 114.00, as the 23.60% Fibo and the 200-hour SMA form relatively strong resistance there.
Hourly chart
There are now 53% of traders with a positive outlook towards the Buck (previously 48%), while 60% of all pending orders are to buy the USD.
Right now 53% of OANDA clients are bears, compared to 52% on Monday. In the meantime, Saxo Bank clients are barely managing to remain on the bullish side, being that 54% of their open positions are now long and the remaining 46% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between December 24 and January 24, traders expect the US Dollar to appreciate to 118.02 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 56% of all forecasts fall above 117 yen, which is above 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 this trading range. At the same time, the second most popular interval was the 123.00-124.50 one, with 12% of survey participants choosing them.