- The share of buy orders increased from 54 to 62%
- 61% of all open positions are long today
- The nearest resistance is located at 103.80
- The closest support rests around 103.10
- Upcoming events: US Philadelphia Fed Manufacturing Index, US Jobless Claims, US Existing Home Sales
US housing starts dropped unexpectedly last month, whereas building permits rose more than expected, official figures revealed on Wednesday. According to the US Department of Commerce, the total number of housing starts issued fell 9.0% to a seasonally adjusted annual pace of 1.05 million in September, hitting the lowest level since March 2015, while market analysts anticipated a slight increase to 1.18 million units during the reported period. August's housing starts were revised up to a 1.15 million rate from the originally reported pace of 1.14 million starts. US single-family starts, which account for the largest segment of the market, climbed 8.1% to a 783,000 unit pace last month, the highest reading since February. The drop was mainly driven by the volatile multi-family segment, which posted a 38.0% decline to 264,000 unit pace in September.
In the meantime, building permits advanced 6.3% to a seasonally adjusted annual pace of 1.23 million in the same month, following August's upwardly revised reading of 1.15 million permits and surpassing the 1.17 million unit pace market forecast. Building activity is set to rebound in the coming months as building permit values remained strong, with single-family and multi-family permits rising 0.4% and 16.8% in September.
US Initial Jobless Claims, Philadelphia Fed Manufacturing Survey and Existing Home Sales
Today focus turns to the US fundamental data, such as the Initial Jobless Claims. They are a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labor market. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy. Another event is the Philadelphia Fed Manufacturing Survey, it is a spread index of manufacturing conditions within the Federal Reserve Bank of Philadelphia. This survey, served as an indicator of manufacturing sector trends, is interrelated with the ISM Manufacturing Index and the Index of Industrial Production. It is also used as a forecast of the ISM Index. Finally, the US Existing Home Sales, which 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 keeps gravitating towards 104.00
A spark of risk-aversion caused the USD/JPY pair edge lower on Wednesday, thus, fully breaking the three-week up-trend. However, the 100-day SMA and the weekly S1 just above the 103.00 major level appear to be forming a strong demand area, which is likely to prevent the Greenback from sustaining more losses. There is still room for a decline of approximately 30 pips, but the daily outlook remains optimistic. Technical indicators are also in favour of a positive outcome, as they retain bullish signals today. In case of a bullish development the Buck has the potential to reclaim the 104.00 level, unless the weekly pivot point at 103.88 limits the gains for the third consecutive day.Daily chart
After reaching its peak of 104.63 one week ago the USD/JPY pair has been sliding down, bouncing back from the down-trend on several occasions. The hourly chart shows that another decline is likely to occur, as the trend-line is also reinforced by the 200-hour SMA, making it more difficult to pierce. Bears could push the pair as low as 102.80, where a possible rebound might occur.
Hourly chart
Market sentiment remains bullish at 61%, whereas the share of buy orders increased from 54 to 62%.
Meanwhile, there has been an increase in the number of long positions at other brokers. Right now 54% of OANDA clients are bulls, compared to 52% on Wednesday. Saxo Bank clients, however, are slightly more bullish than on Wednesday, being that the portion of longs now takes up 61% of the market.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between September 20 and October 20, traders expect the US Dollar to appreciate to 104.85 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 76% of all forecasts fall above 102 yen, which is close to the current spot price. By far the most popular interval is 108.00-109.50, chosen by 19% of all the surveyed, compared to popularity of the 105.00-106.50, 106.50-108.00 and 109.50-111.00 intervals.