- The number of purchase the US Dollar in the 100-pip range edged higher from 49 to 65%
- There are three quarters (75%) of traders holding long positions
- The monthly S1 at 107.04 represents immediate resistance
- Support is around 106.50
- 56% of the survey participants expect the US Dollar to cost more than 114 yen in three months
- Upcoming events: US Jobless Claims, US Wholesale Inventories, US Natural Gas Storage, Japanese PPI, US Preliminary UoM Consumer Sentiment, US Federal Budget Balance
For another day the US Dollar sustained losses against almost all of other major currencies, with the only exception being the Cable. The Pound edged 0.62% lower against Swiss Franc, while against the Kiwi it suffered a 0.48% decline. Disappointment in the Crude Oil Inventories also triggered losses versus the Loonie and the Aussie, namely 0.33% and 0.18%, respectively. Meanwhile, the USD/JPY edged 0.35% lower, while the EUR/USD edged 0.32% higher. The only gain the US Dollar experienced was versus the British Pound, which in turn was dragged down by ‘Brexit' concerns
According to the latest report, the US crude futures advanced for a third consecutive day on Wednesday, reaching new 2016 highs. The US benchmark posting a nearly 11-month closing record. On the New York Mercantile Exchange, West Texas Intermediate crude for July delivery added +0.62% and rose 87 cents, or 1.7%, to settle at $51.23—showing the highest close for a nearby contract since July 15. Meanwhile, August Brent crude, increased 0.42% the global oil benchmark, reaching $1.07, or 2.1%, to finish at $52.51 a barrel on London's ICE Futures exchange, its highest close since October. According to the analysts, futures were affected in a positive way boosted by reports of another attack on oil facilities in Nigeria. They were also buoyed by data from an industry trade group, the American Petroleum Institute, which on Tuesday said that US crude inventories had fallen by 3.6 million barrels. Also, crude found support from continued supply disruptions, as well as China import data and a decline in crude inventories.
By the way, prices have nearly doubled since hitting 13-year lows earlier in this year mostly since companies have slashed spending on new drilling, and unplanned outages in Nigeria and Canada helped reduce the global oversupply of crude.
Vatsal Srivastava, director at the Blackwater Consulting, explained why the US Dollar advanced against the Yen last week. He said there was nothing fundamentally driving USD/JPY on Monday, but one of the key drivers was the falling oil prices, which was actually boosting the Yen; in analyst's opinion, as there was an addition cause for more QQE. Vatsal Srivastava also mentioned 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 summed up.
US Jobless Claims and Japanese PPI
From the US the Initial Jobless Claims are due, which are a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labour market. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy. Early tomorrow the Bank of Japan is to release the PPI data, which shows the change in the price of goods sold by corporations. It is a leading indicator of consumer inflation and could have some impact on the Japanese domestic currency.USD/JPY remains on the back foot
As was anticipated, the USD/JPY currency pair failed to fall beyond the 38.20% Fibo yesterday, but closed still just under the 107.00 mark. Consequently, more bearish momentum is likely to follow, with the 38.20% Fibo at 106.65 to be put the test. The lower Bollinger band is bolstering that support, also suggesting that the exchange rate could drop even beyond 106.50. Meanwhile, technical indicators are also in favour of the negative outcome, as they are giving bearish signals both in the daily and the weekly timeframes, implying that all Monday's gains are to be erased by week's end.Daily chart
The pair remains in a down-trend, unable to pierce the resistance line since the beginning of the month. The 38.20% Fibo was providing some support, but appears to be failing to keep the USD/JPY elevated now. A full break of this level is likely to send the Buck on a bearish path at least towards 106.00.
Hourly chart
There are three quarters (75%) of traders holding long positions today (previously 73%). At the same time, the number of orders to purchase the US Dollar in the 100-pip range edged higher from 49 to 65%.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 57% of positions opened by its clients are long. Similarly, 60% of positions opened by Saxo Bank traders are long as well, up from 57% on Wednesday.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to rise above 114 yen
Slightly more than a half of the surveyed (56%) 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 more than a quarter (26%) of the voters. According to the votes collected between May 09 and June 09, the mean forecast for Sep 09 is 112.59. At the same time, 17% of the surveyed believe the Greenback could cost more than 117 yen in three months.
Participants of the Dukascopy weekly quiz were largely bullish on the USD/JPY pair, as 63.6% of all votes were positive; however, the average prediction for Friday stayed just above the 110.1 mark.
Khimit, a trader with the Dukascopy Community, suggests that "after a downtrend from 121.65 to 105.609, the pair has found a support level around 106.25." He now expects a range formation in the near time around 108.35 mark on the 10th of June.
Meanwhile, megajorko is bearish towards the USD/JPY pair. "The Yen becomes absolutely unpredictable. The pair has lost all possible stability and there are possibilities of huge spikes to both directions before an eventual move to the all round number 100," he gave his comments.