- The portion of sell orders surged from 41 to 70%
- 57% of traders are long the Buck
- The 55-day SMA, the Bollinger band and the 38.20% Fibo around 106.50 represents immediate resistance
- Support is at 105.07
- 62% of the survey participants expect the US Dollar to cost less than 108.00 yen in three months
- Upcoming events: US CPI and Core CPI, US Retail and Core Retail Sales, Empire State Manufacturing Index, US Capacity utilization Rate, US Industrial Production, US Preliminary UoM Consumer Sentiment
The number of Americans filing unemployment benefits remains unchanged compared to the previous week, demonstrating the lowest level since April, giving a hint that labour market started to recover amid a shaky global economy. According to the Labour Department, initial claims for state unemployment benefits were unchanged at a seasonally adjusted 254,000 for the week ended July 9. Also, following tendency left claims close to a 43-year low of 248,000 touched in mid-April. Economists, in turn, had expected jobless claims to reach 265,000 from the 268,000 originally reported for the June. Taking into consideration week-to-week volatility, the four-week moving average slipped to 259,000 compared to the last week's average of 264,750.
In the meantime, according to the Energy Information Agency, the natural gas storage advanced more-than-expected in June. Natural gas stocks went up by 64 billion cubic feet for the week ending July 8. Analysts, in turn, were expecting a storage addition in a range of 55 billion to 65 billion cubic feet. Meanwhile, the five-year average for the week is an injection of around 77 billion cubic feet.
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 Retail Sales and CPI are the main drivers today
A number of US fundamentals are due today, which are expected to have a significant impact on the USD/JPY pair's performance. First of all, the US CPI, which 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. Core CPI, however, excludes the Food and Energy sectors. Second, the US Retail Sales, which 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. At the same time, the Core Retail Sales exclude the Automobile sector. Another important release will be the Industrial Production, which 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. Finally, the Capacity Utilization – a 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 US economy. A high capacity utilization stimulates inflationary pressures.USD/JPY in limbo ahead of fundamental data
The US Dollar succeeded in outperforming the Japanese Yen for another day on Thursday, having retaken the 105.00 major level. The USD/JPY currency pair could now post more gains, as technical indicators are giving mixed signals, rather than bearish, like yesterday. However, the main picture is to be drawn by the US fundamental data today, as poor figures might also cause the Greenback to weaken and, thus, to retreat below 104.00. Moreover, there is a strong resistance cluster, located around 106.50, which is likely to prevent the pair from edging significantly higher.On the hourly chart the USD/JPY currency pair appears to have formed an ascending channel pattern. However, the upper border still requires another confirmation for the pattern to be fully realized. Moreover, risks of a downside breakout are present, as the exchange rate slowly approaches the 38.20% Fibo at 106.65.
Hourly chart
For the fifth day this week the share of bulls inched down. There are now 57% of traders being long the Buck (previously 61). At the same time, the portion of sell orders surged from 41 to 70%.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 64% of positions opened by its clients are long. Similarly, 53% of positions opened by Saxo Bank traders are long as well, compared to 56% on Thursday.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to fall below 108.00 yen
Slightly more than half of the surveyed (62%) now assume that the US Dollar is to cost less than 108.00 yen after three month time. The most popular choice, however, implies that the Greenback is to cost between 108.00 and 109.50 yen in three months, selected by 20% of the voters. According to the votes collected between June 15 and July 15, the mean forecast for Oct 15 is 105.54. At the same time, 12% of the surveyed believe the Greenback could cost either between 100.50 and 102.00 or between 106.50 and 108.00 yen in three months.