- 55% of all pending orders are to purchase the Buck
- Traders' sentiment remains bearish at 65%
- The nearest resistance is at 114.15
- Immediate support rests at 113.47
- Upcoming events: US CPI and Core CPI, US Retail Sales and Core Retail Sales, US Preliminary UoM Consumer Sentiment
The seasonally adjusted Producer Price Index for final demand rose more than expected in April, official data showed on Thursday. According to the Bureau of Labour Statistics, US producer prices rose 0.5% for the month of April, following the preceding month's 0.1% decline and surpassing analysts' expectations for a 0.2% hike. On a yearly basis, the Producer Price Index posted a gain of 2.5% in the reported month, the strongest increase since February 2012, compared to 2.3% registered in March. A 0.4% advance in prices for final demand services caused over 60% of the rise in the final demand PPI. That climb was mainly driven by higher costs of investment advice, dealing, securities brokerage and related services.
Furthermore, the report showed prices for goods and food rose 0.5% and 0.9% respectively, while energy prices climbed 0.8%, supported by a 3.9% jump in the gasoline cost. In the meantime, the so-called core PPI, which excludes volatile items, showed a monthly advance of 0.4% and a 1.9% gain year-over-year with both readings going beyond economists' forecasts.
US CPI and Retail Sales to focus on
The last day of the week brings only US fundamental data, namely the CPI and the 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, whereas the Core Retail Sales exclude the automobile sector. As for the CPI, it 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 food and energy in order to capture a more accurate calculation..
USD/JPY muted ahead of inflation data
Despite strong second class US fundamentals yesterday, the Greenback failed to outperform the Yen, due to a drop in yields and stocks. Consequently, the exchange rate fell back under the 114.00 major level, while also putting the second support level, namely the weekly R1, to the test. Downside risks persist today as well, with key inflation data eyed. Disappointment could lead to another significant drop, with the main target being the 113.00 handle, where the 100-day SMA and the monthly R1 rest. On the other hand, technical indicators imply the USD/JPY pair is to edge higher again, in which case the 114.40 mark is still likely to limit the possible gains.Daily chart
The USD/JPY consolidated through the last two days, now reaching the up-trend at 113.70. The 200-hour SMA supports this trend-line, but downside risks are still present. In case bulls manage to prevail – the 115.00 mark is likely to be the intraday ceiling, while in a bearish scenario the 112.50 level could easily be violated.
Hourly chart
Traders' sentiment remains bearish at 65%, whereas 55% of all pending orders are to purchase the Buck (previously 51%).
Right now 53% of OANDA clients are bulls, adding one percentage point from before, as the bullish sentiment has been holding around the same level for some time now. In the meantime, Saxo Bank clients manage to retain a neutral outlook towards the US Dollar, being that 50% of their open positions are now short and the remaining 50% are long.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between April 12 and May 12, traders expect the US Dollar to appreciate to 111.39 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 58% of all forecasts fall above 111 yen, which is still below the current spot price. The majority of people who voted expect the US Dollar to cost somewhere between 112.50 and 114.00 yen in three months, with 18% of the survey participants choosing this trading ranges. At the same time, the second most popular interval was the 115.50-117.00 one, with 14% of survey participants forecasting this trading range.