- The portion of sell orders remains unchanged at 59%
- 57% of traders hold short positions
- Immediate resistance lies around 117.30
- The closest support rests around 116.75
- Upcoming events: US CPI and Core CPI, Philadelphia Fed Manufacturing Survey, US Jobless Claims, US Current Account, US Markit Manufacturing PMI
US retail sales rose modestly last month due to lower sales of motor vehicles, official figures revealed on Wednesday. According to the Commerce Department, retail sales advanced 0.1% in November, compared to the preceding month's downwardly revised gain of 0.6%, whereas analysts expected sales to grow 0.3%. Year-over-year, sales increased 3.8%. Excluding volatile items, core retail sales climbed 0.1%, following October's 0.6% rise and falling behind the 0.4% gain market forecast. Analysts suggest the US presidential elections had some degree of general impact on sales last month, as traditionally November marks the start of the important holiday shopping season. Separately, the Labor Department reported that its Producer Price Index grew 0.4% on a monthly basis in November, the biggest increase since June, after remaining unchanged last month. On a yearly basis, producer prices rose 1.3%, the largest gain since November 2014.
In the meantime, the US Federal Reserve raised interest rates for the first time in a year. Also, Fed chairwoman Janet Yellen announced a 0.25% hike in the benchmark rate to 0.50-0.75%, and predicted three further rates increase in 2017.
Most focus is on US data
Thursday is also rich in terms of fundamental events. First of all, the US CPI and Core CPI are due. The CPI is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. The Core CPI excludes the Food and Energy sector in order to capture a more accurate calculation. Another important event will be the Philadelphia Fed Manufacturing Survey, which 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. Going further is the US 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. Finally, some attention should be paid to the Current Account. It is a net flow of current transactions, including goods, services and interest payments into and out of the US. A current account surplus indicates that the flow of capital into the US exceeds the capital reduction.USD/JPY attempts to post more gains
With Fed increasing the funds rate yesterday, the US Dollar successfully outperformed the Yen, thus, reconfirmed the four-week up-trend. Moreover, the Buck managed to climb over the 117.00 level, stabilising above a relatively strong resistance area, suggesting that more gains could now follow. Furthermore, technical indicators also imply the USD/JPY currency pair is to advance today. The Bollinger band around 117.29 represents immediate resistance, but a much strong cluster rests circa 118.75, formed by the weekly R3 and the monthly R1, which is the main target. However, there are doubts the US Dollar will be able to maintain trade above 118.00.Daily chart
The US Dollar managed to find support around 115.00 yen, where the four-week up-trend and the 200-hour SMA were located at. The USD/JPY now has sufficient space for a decline, which would not break the bullish trend, but since there are no solid resistance on the way, further gains are anticipated.
Hourly chart
Market sentiment remains bearish, now with 57% of traders holding short positions. The portion of sell orders remains unchanged at 59%.
Meanwhile, there has been an increase in the number of long positions at other brokers. Right now 56% of OANDA clients are bears, compared to 57% on Wednesday. In the meantime, Saxo Bank clients also remain slightly on the bearish side, being that the portion of shorts takes up 51% 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 15 and December 15, traders expect the US Dollar to appreciate to 114.53 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.