- The portion of buy orders surged from 38 to 63%
- 52% of all open positions are long
- Immediate resistance lies circa 114.40
- The closest support rests around 113.40
- Upcoming events: US Existing Home Sales, FOMC Meeting Minutes
US building permits advanced more than expected whereas homebuilding activity weakened in January, official figures revealed on Thursday. The Commerce Department reported building permits rose 4.6% to a seasonally adjusted annual pace of 1.29 million in January, following the previous month's upwardly revised 1.23 million units and surpassing analysts' expectations for a 1.23 million-unit rate. The increase caught markets by surprise, as the figure reached the highest level since November 2015, suggesting solid growth in starts in the middle of 2017.
Meanwhile, housing starts declined 2.6% to an annualised rate of 1.25 million units in the same month, following December's upwardly revised reading of 1.28 million, whereas economists expected them to increase to a 1.23. Analysts suggest that the housing market recovery is likely to be sustained by strong labor market, which supported household formation. Separately, the Philadelphia Federal Reserve said its Manufacturing Index jumped to 43.3 points in February, the highest level in 33 years, driven by a jump in new orders, which climbed to 38.0 from 26.00. Data also showed the Employment Index fell to 11.1 from 12.8, while the Business Outlook Index for the next six months slid to 53.5 points.
All eyes on FOMC Meeting Minutes
There is only one upcoming fundamental data release which might have some importance – the US Existing Home Sales. It provides 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. However, the most impact is expected to be from the FOMC Meeting Minutes. FOMC stands for the Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy. Any news concerning a possible rate hike in March is likely to trigger volatility in USD pairs today.USD/JPY: FOMC Minutes eyed
The USD/JPY currency pair successfully climbed over the immediate resistance area on Tuesday, but was unable to reach the 114.00 major level. The main target is the 115.00 mark, with an interim resistance lying on the pair's path around 114.40, represented by the weekly R1 and the monthly PP, which could prevent the Buck from reaching its goal. However, a strong impetus is required for a surge beyond 115.00, otherwise the consolidation trend is to be maintained. Today's FOMC Minutes could provide such a boost for the Greenback, but lately this particular event has been failing to strengthen the US currency substantially.Daily chart
Once again the USD/JPY currency pair failed to stabilise above the 200-hour SMA for long, as today's bearish momentum pushed the exchange rate lower again. However, this provided the US Dollar with an opportunity to reconfirm the bullish trend-line. A successful rebound around 113.20 would cause the up-trend to be fully realised, making it a solid support in the near future.
Hourly chart
Bulls are barely outnumbering the bears, as 52% of all open positions are long. The portion of buy orders surged from 38 to 63% in 24 hours.
Right now 55% of OANDA clients are bulls, compared to 59% on Tuesday. In the meantime, Saxo Bank clients remain on the bullish side, being that 58% of their open positions are now long and the remaining 42% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between January 22 and February 22, traders expect the US Dollar to appreciate to 114.03 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 55% of all forecasts fall above 114 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 106.50 and 108.00 yen in three months, with 18% of the survey participants choosing this trading range. At the same time, the second most popular interval was the 114.00-115.50 one, with 15% of survey participants choosing it.