- 58% of all pending orders are to acquire the US Dollar.
- 69% of traders hold long positions
- Immediate resistance lies at 111.07
- The closest support rests circa 110.15
- Upcoming events: US HPI, US CB Consumer Confidence, US New Home Sales
US manufacturing activity in the Mid-Atlantic region slowed markedly in April, official figures revealed on Thursday. The Philadelphia Federal Reserve reported its Manufacturing Index dropped to 22.0 in the reported month, following March's reading of 32.8 and falling behind analysts' expectations for a decrease to 25.6 points. Analysts stated that business optimism prompted by Donald Trump's win in the presidential election started to fade, putting downward pressure on business activity. Thursday's data also showed the New Orders Index fell to 27.4 from 38.6 points posted in March, the highest since December 1987.
Meanwhile, the six-month business outlook declined to 45.4 from 59.5 points registered in March, the strongest since August 2014. The Price Index dropped to 33.7 from 40.7 points posted in March, the highest since May 2011. On the positive side, the Employment Index rose to 19.9, the strongest since May 2011. Manufacturers also said that they would increase capital spending this year due to expected higher sales. Furthermore, 36.7 of the respondents said that capital spending would take place in the first half of the year. Other data release on Thursday showed initial jobless claims climbed 10,000 to 244,000 last week.
Another uneventful Monday
Once again Monday is a quiet day in terms of economic data releases, thus, focus turns to some events on Tuesday. First of all, the US HPI, as it provides an estimated value of housing market conditions. It is an important indicator, as the housing market is considered as a sensitive factor to the US economy. Second, the US New Home Sales, which is an important measure of housing market conditions. House buyers spend money on furnishing and financing their homes, so as a result the demand for goods, services and the employees is stimulated. Finally, the US Consumer Confidence, which is released by the Conference Board. It captures the level of confidence that individuals have in economic activity. A high level of consumer confidence stimulates economic expansion, while a low level drives to economic downturn.USD/JPY to hold above 110.00
The USD/JPY currency pair remained relatively unchanged on Friday, retaining its position above the 109.00 mark. However, on Sunday the French election first round's results allowed the risk-on mood to prevail and boosted the US Treasury yields, causing the pair to open with a strong bullish gap today. Despite this gap, a technical correction is likely to take place, with investors taking profit of the recent rally. Technical indicators also suggest the Greenback is to weaken against the Yen today, but price is expected to close above the 110.00 threshold, despite strong downside volatility. The election surge ultimately was a good sign for the USD/JPY, as it preserved the channel pattern.Daily chart
The hourly chart is unable to draw a cleared picture today, but it does suggest that a decline beyond 109.00 is unlikely, as the 200-hour SMA is now bolstering last week's up-trend. Ultimately, the USD/JPY pair is expected to continue climbing up until the descending channel's resistance line is reached around 112.00 or 113.00.
Hourly chart
There are 69% of traders holding long positions today (previously 72%), whereas only 58% of all pending orders are to acquire the US Dollar.
Right now 61% of OANDA clients are bulls, compared to 63% on Friday, 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, 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 March 24 and April 24, traders expect the US Dollar to appreciate to 111.00 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 51% of all forecasts fall above 111 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere either between 108.00 and 109.50 or between 112.50 and 114.00 yen in three months, with 15% of the survey participants choosing each of these trading ranges. At the same time, the second most popular intervals were the 114.00-115.50 and the 115.50-117.00 ones, with 11% of survey participants choosing each of them.