- Purchase orders take up 55% of the market
- 60% of all open positions are long
- Immediate resistance lies around 113.90
- The closest support rests around 113.20
- Upcoming events: US Capacity Utilization Rate, US Industrial Production, US CB Leading Index, US Preliminary UoM Consumer Sentiment, US Labor Market Conditions Index
The number of Americans who filed for unemployment insurance last week decreased to 241,000, a survey from the Labor Department revealed on Thursday, following the preceding week's 243,000 filings. Meanwhile, market analysts anticipated a slight rise to 245,000 during the reported period. The number of new residential building permits issued in February fell 6.2%, the Census Bureau revealed on Thursday. Nevertheless, housing construction advanced 3% and was mainly driven by one-family house applications, whose growth hit a record since September 2007. The spike in construction was mainly attributable to the robust job market and healthier finances. Yet, high mortgage costs and increasing real estate prices remain an issue for potential home buyers. Overall, the situation in the home-building industry remains positive, as the housing market index reached a 12-year high. The diffusion index fell to 32.8 in March, the Philadelphia Fed reported on Thursday.
Nonetheless, it remained positive for eight consecutive months. The difference between firms who reported an increase in activity against decrease was 33%. Similarly, the difference between firms reported a rise in employment against unemployment was 17%. So, in general, regional manufacturers maintained optimism.
US fundamentals in focus again
A number of US fundamentals is likely to have some impact on the USD/JPY pair today. First of all, the US Industrial Production, which shows the volume of production of US industries, such as factories and manufacturing. Up-trend is regarded as inflationary, which may anticipate interest rates to rise. If high Industrial Production growth comes out – it may generate a positive sentiment for the USD. Second, the Capacity Utilization Rate, which is the percentage of the US production capacity, which is actually used over the short-time period. It is indicative of overall growth and demand in the US economy. A high capacity utilization stimulates inflationary pressures. Finally, the CB Leading Index. It measures future trends of the overall economic activity, including employment, average manufacturing workweek, initial claims, permits for new housing construction, stock prices and yields curve. It is considered as a measure for economic stabilise in the US. This even generates some volatility for the USD.USD/JPY stuck between 113.15 and 113.75
The US Dollar managed to avoid more weakness, remaining relatively unchanged against the Japanese Yen yesterday. The two immediate support clusters were strong enough to limit the losses on Thursday, but at least one of them is expected to give in in the near future. As a result, the USD/JPY pair is to drop under 113.00, leaving the ascending channel's support line to trigger a U-turn. Moreover, a rebound from this up-trend would reconfirm the channel pattern and provide sufficient bullish momentum to climb back to 115.00 and eventually breach that psychological resistance.Daily chart
On the hourly chart the USD/JPY pair is still located in a relatively tight range – between 113.00 and 113.50. A substantial fundamental event is required for the pair to leave this cage, which Trump's speech on Monday could provide. Today's data is unlikely to cause a breakout.
Hourly chart
There are 60% of all open positions being long today, compared to 58% on Thursday. At the same time, the portion of orders to acquire the US Dollar added 10% points. The orders now take up 55% of the market.
Right now 57% of OANDA clients are bulls, compared to 55% on Thursday. In the meantime, Saxo Bank clients retain a positive outlook towards the US Dollar, being that 62% of their open positions are now long and the remaining 38% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between February 17 and March 17, traders expect the US Dollar to appreciate to 115.12 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 66% 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 118.50 and 120.00 yen in three months, with 20% 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 16% of survey participants choosing it.