- The number of sell orders inched up from 51 to 65%
- Bulls take up 72% of the market
- The monthly S1, the weekly R1 and the 20-day SMA around 110.80 represent immediate resistance
- Support is around 108.95
- 53% of the survey participants expect the US Dollar to cost more than 114 yen in three months
- Upcoming events: Empire State Manufacturing Index, US Capacity Utilization Rate, US Industrial Production, US Preliminary UoM Consumer Sentiment
Weaker-than-anticipated US CPI figures failed to push the American Dollar lower yesterday, as the only decline was registered against the Australian Dollar. The Aussie managed to outperform the Buck due to positive Australian employment data, with the AUD/USD pair edging 0.56% higher. At the same time, the US Dollar gained 1.05% versus the Kiwi, which suffered from negative news from the RBNZ, with the NZD/USD down 1.05%. The Greenback slightly appreciated against the Sterling and the Loonie, gaining 0.34% and 0.21%, respectively, whereas remained relatively unchanged versus the Euro, surging 0.06%, the Yen, surging 0.05% and the Swiss Franc, adding 0.01%.
US consumer prices climbed modestly in March for the first time in four months, meaning little urgency for the Fed to hike interest rates in the months to come. According to the Labor Department, its Consumer Price Index inched up 0.1% last month as a recovery in gasoline prices was partially offset by a decline in the cost of food. While the measure rose the most since November, it came in against economists' expectations for a 0.2% gain. In the 12 months through March, the CPI increased 0.9% after rising 1.0% in February. The core CPI, which excludes food and energy costs, inched up 0.1%, the smallest since August and followed a 0.3% rise in February.
A separate report showed the number of Americans filing for unemployment benefits unexpectedly fell last week to match its lowest level since 1973, in the latest sign of a strong labour market. Initial claims for jobless benefits decreased by 13,000 to a seasonally adjusted 253,000 in the week ended April 9. Jobless claims have been holding near historic lows this year and the US economy added an average of 209,000 jobs a month in the first quarter. The four-week moving average, which smooths out week-to-week volatility, dropped by 1,500 last week to 265,000. With benign inflation and wages rising moderately as the improving labour market attracts both previously discouraged and new job seekers, the US central bank is unlikely to hike rates again before the second half of the year.
Vatsal Srivastava, director at the Blackwater Consulting, explains why the US Dollar is a advancing against the Yen this week. Even though he says that there was nothing fundamentally driving USD/JPY on Monday, one of the key drivers is the falling oil prices, which is actually boosting the Yen, in his opinion, as there is an addition cause for more QQE. Vatsal Srivastava also mentions that "it is going to be a hard economic ride ahead and there seems to be no light on the horizon for Japan as of now". "Lets hope for the best," he added.
US Industrial Production and Capacity Utilization Rate
The last day of the week brings once again only data concerning the US economy. First of all, the US Industrial Production, which is released by the Board of Governors of the Federal Reserve, and shows the volume of production of US industries such as factories and manufacturing. Up trend is regarded as inflationary which may anticipate interest rates to rise. Second, the US Capacity Utilization Rate. The Capacity Utilization, released by the Federal Reserve Board, is the percentage of the US production capacity which is actually used over the short-time period. It is indicative of overall growth and demand in the U.S. economy. A high capacity utilization stimulates inflationary pressures.USD/JPY continues to edge higher
In spite of the poor US inflation data yesterday, the USD/JPY currency pair remained relatively unchanged. The weekly PP and the monthly S2 keep providing immediate support for the pair around 109.90, while the nearest resistance is still represented by the monthly S1, the weekly R1 and the 20-day SMA circa 110.75. Even though technical indicators keep giving bearish signals, bulls are still expected to push the Greenback higher against the Yen today. The Buck has been appreciating ever since it rebounded from the 18-month low on Monday, making its way towards the ten-week down-trend around the 112.00 major level.Daily chart
The USD/JPY currency pair experienced a small setback yesterday, but the bullish momentum keeps prevailing after the Monday's rebound. Although the resistance trend-line is still out of reach, the exchange rate should continue climbing towards it, with the 200-hour SMA now acting as a support.
Hourly chart
Bulls remain in control
Bulls also dominate the OANDA market, where 67% of open positions are long, compared to 71% on Thursday. The sentiment as reported by SAXO Bank remains bullish - 60% of currently open positions are long, down from 62% on Thursday.
Spreads (avg, pip) / Trading volume / Volatility
More than a half expect the exchange rate to rise above 114 yen
More than half of the surveyed (53%) now assumes that the US Dollar is to cost more than 114.00 yen after three month time. The most popular choice implies that the Greenback is to cost somewhere between 114.00 and 115.50 yen in three months, selected by 23% of the voters. According to the votes collected between March 15 and April 15, the mean forecast for July 15 is 113.03. At the same time, 14% of the surveyed believe the Greenback could cost between 106.50 and 108.00 yen in three months.
The bearish outlook of the Dukascopy Community members kept growing, as now 69% of traders are short the USD/JPY, while the remaining 31% are long.
Compared to the previous week, Panzer now has a negative outlook towards the Buck. He said that "the advantages are still on the downside, strong downtrend, there is no bottom in sight."
Meanwhile, Likerty expects the US Dollar to outperform the Japanese Yen by the end of the week. "I am expecting a bit of bullish correction before diving for 107.50's again," he commented, also adding that "probably the USD/JPY and EUR/USD will be the slowest pairs this week."