- The number of buy orders edged up from 56 to 61%
- Nearly three quarters (73%) of all open positions are long
- Immediate resistance lies at 109.30
- The closest support rests around 108.90
- Upcoming events: US CPI and Core CPI, US Retail and Core Retail Sales
US producer prices dropped unexpectedly last month due to the lower cost of services and energy products. The Labour Department reported on Thursday that its Producer Price Index dropped 0.1% in March, following the preceding month's gain 0f 0.3% and falling behind analysts' expectations for a 0.0% reading. That marked the first decline since August 2016. On an annual basis, however, the PPI was up 2.3% last month, the largest gain since March 2012, compared to February's increase of 2.2%. The cost of services fell 0.1%, accounting for about 75% of the drop. The price of energy plunged 2.9%, with gasoline prices falling 8.3%. Back in February, energy prices were 0.6% up. Taking into account surging oil prices and Saudi Arabia's intentions to cut production, producer prices are set to rebound in the upcoming months.
Overall, inflation continues rising amid the US Dollar strength and stronger domestic demand, pleasing the Federal Reserve, which is expected to its interest rates in June. Thursday's data also showed that, excluding volatile items, producer prices were unchanged last month, after rising 0.3% in February, whereas analysts expected core prices to accelerate 0.2% in March. After the release, the US Dollar dropped markedly against other major currencies.
US CPI and Retail Sales are today's market drivers
Friday brings inflation data, namely the US CPI and Core CPI. 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. As for the Core CPI, those volatile products, such as food and energy, are excluded from it in order to capture and accurate calculation. Another important event is due – the US Retail Sales. The Retail Sales measure the total receipts of retail stores. Monthly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. In Core Retail Sales the automobile sector is excluded.USD/JPY attempts to remain above 109.00
Rather mixed fundamental data on Thursday caused the US Dollar not only to avoid losses, but also to refrain from posting any substantial gains. As a result, the USD/JPY currency pair provided the descending channel's support line with an additional confirmation, indicating that price might soon rebound and begin its journey towards the 112.00 level. Although daily technical indicators are unable to confirm a recovery, the longer timeframe ones can. Moreover, the 200-day SMA is bolstering the channel's lower border, which should be sufficient for the Buck to bounce back from the 109.00 mark. In case the given support area fails to hold, risks of plunging towards 105.00 would arise.Daily chart
On the hourly chart the trend-line also was confirmed and is close to receiving another one today. Ultimately, an upside breakout is expected, thus, a rebound should occur in the coming days for this outlook to be verified.
Hourly chart
Nearly three quarters (73%) of all open positions are now long. At the same time, the number of buy orders edged up from 56 to 61%.
Right now 61% of OANDA clients are bulls, slightly lower than on Thursday, the bullish sentiment has been holding around the same level for some time now. In the meantime, Saxo Bank clients retain a positive outlook towards the US Dollar, with their sentiment being close to ours, being that 74% of their open positions are now long and the remaining 36% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between March 14 and April 14, traders expect the US Dollar to appreciate to 112.25 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 62% of all forecasts fall under 114 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 108.00 and 109.50 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 115.50-117.00 one, with 14% of survey participants choosing it.