- SWFX market sentiment is 57% bearish
- 57% of pending orders in the 100-pip range are to BUY
- Important resistance is located circa 113.35
- Upcoming events: US CPI and Core CPI m/m, US Core Retail Sales m/m, US Retail Sales m/m, US Preliminary UoM Consumer Sentiment, FOMC members Evans and Kaplan to speak
The Labour Department revealed that the US Producer Price Index climbed 0.4% in September.
Data suggested the growth fuelled by higher gasoline prices, as they marked the strongest rise in two years due to production disruptions in Texas oil refineries caused by Hurricane Harvey. Moreover, the gain is set to bolster the Fed's case for the next rate hike this year despite sluggish inflation readings.
US fundamentals in focus
Friday's trading session will be all about fundamentals from the US. The given vountry is to release four sets of important data for the month of September at 1230GMT, namely, the CPI and Core CPI, the Retail Sales and Core Retail Sales. In addition, the University of Michigan is to publish its preliminary Consumer Sentiment at 1400GMT.
Finally, the session will end with speeches by two FOMC members. The President of the Federal Bank of Chicago Charles Evans is to speak about the economy and monetary policy at the Wisconsin Summit on Financial Literacy at 1425GMT, while the President of the Federal Reserve Bank of Dallas Robert Kaplan will address the same issues at the Chartered Financial Analyst Institute at 1530GMT.
USD/JPY moves below 112.20
Although the Bureau of Labour Statistics released a better than expected US Core PPI, the buck did not manage to make any significant advances against the yellow metal yesterday. The reason for that was a combined support set up by the 55-hour SMA in conjunction with the bottom trend-line of a rising wedge.Accordingly, today the pair is expected to make a breakout from this pattern. The fact that the northern side near the 1,295.00 level is secured by the 55-day SMA indicates on breakout to the bottom. Moreover, this direction is line with trade patterns theory.
However, there is need to take into account traders' reaction on release the US inflation and retail sales data, which might lead to active sell off of the Greenback.
Hourly chart
Bears dominated the market on Thursday, thus pushing the rate below the 20-day SMA. The same situation is apparent this morning, as the Greenback has already breached the weekly S1 at 112.19 and is moving towards the 200-day SMA circa 112.00. Thus, the most probable trading range for this session could be between the 20- and 200-day SMAs.
Daily chart`
The bearish market sentiment has remained at the same for three consecutive sessions, as the number of traders holding short positions is still 57%. In addition, 52% of pending orders are to sell the US Dollar (-2%).
OANDA clients are bearish on the US Dollar, as their positions are 57% short (-1%). In addition, 51% of Saxo Bank traders are currently holding short positions (-1).