- SWFX market sentiment is 65.05% bearish
- 51.64% of pending orders in 100-pip range are set to buy
- 64.84% of all pending orders are to buy the Yen
- The nearest resistance is located near 112.980
- Upcoming Events: US Unemployment Claims, US Philly Fed Manufacturing Index
Consumer prices in the United States were flat, while retail sales dropped for the second consecutive month in June. The Labour Department reported on Friday that its CPI registered an unchanged reading in the observed month, missing market expectations for a 0.1% rise, as the cost of mobile services and gasoline declining. On a yearly basis, the index surged 1.6% in June, continuing to ease from February's 2.7%, when it showed the strongest gain in five years. Overall, economists suggested that the weaker-than-expected reports are set to diminish expectations for the Fed to raise interest rates for the third time this year, with inflation being the main uncertainty factor to define the course of further monetary policy changes.
The US Producer Price Index for final demand nudged up 0.1% in June on the back of sustained increases in services cost that managed to offset plunging energy prices, data released by the Labour Department revealed on Thursday. In 12 months through June, the PPI advanced 2.0%, down 0.4% from May's reading, as the energy-led spike was dropped out of the calculation. Meanwhile, the Core Finished Goods PPI advanced a modest 0.1% over the reported period, missing economists' expectations for a 0.2% uptick and following the 0.3% surge registered in May. Overall, economists suggested that the weaker-than-expected reports are set to diminish expectations for the Fed to raise interest rates for the third time this year, with inflation being the main uncertainty factor to define the course of further monetary policy changes.
No fundamental data worth attention
There are only two data sets that might affect the currency exchange rate today. The first is the weekly change of the US unemployment claims, while the second one is the Philly Manufacturing Index, which reflects producers' perception of the current business conditions.
USD/JPY breaks from falling wedge
In line with expectations, the currency pair bounced off from a lower support line near the 111.596 mark and left a falling wedge in an upward direction, bypassing on the way the 20-, 55- and 100-hour SMAs. Such outcome should establish a new uptrend, which will guide movement of the pair at least in next two days. However, for this theory to be true, the currency exchange rate has to bypass two combined resistance levels. The first is formed by the 200-hour SMA and the weekly PP at 113.098, while the second is set up by the weekly and monthly R1 at 113.940. Most probably, one of them will manage to turn around the currency rate, provided that this will not happen even earlier.Hourly chart
An early Thursday morning showed the USD/JPY is continuing to move away from a combined support level formed by the 55-, 100- and 200-day SMAs and the weekly S1 at 111.69. For the moment, it is difficult to confirm, whether this springboard gave the currency rate an impulse strong enough to let it jump to the weekly PP at 113.098. Unless this projection materializes, the pair will continue to fluctuate in a one week long descending channel (besides the long-term symmetrical triangle).
Daily chart
The bearish market sentiment still dominates in this trading session, as the number of all short positions jumped to 65%, compared to 63% on Wednesday. Moreover, 56.26% of pending orders are to buy the US Dollar.
OANDA clients became more bearish on the US Dollar, as 54.19% of all open positions are short. Similar views also hold Saxo Bank clients, whose long positions have increased to 52.40, compared to 48.50% yesterday.
Spreads (avg, pip) / Trading volume / Volatility
Traders bullish on US Dollar
Traders expect the Greenback to depreciate down to the 111.75 mark against the Japanese Yen in three months' time, thus demonstrating that bears have taken the lead. At this moment, 47% of all forecasts are bearish, being located below the current spot price amounting to 112.35. Accordingly, 53% of respondents anticipate advance of the currency exchange rate. Among them, 36% hold the view that by the end of October the price of the USD/JPY will fluctuate in a range between 114 and 115.5