- The portion of buy orders slid from 59 to 56%
- Bulls take up only 55% of the market
- The nearest resistance is located at 105.15
- The closest support rests at 104.43
- Upcoming events: US Durable and Core Durable Goods Orders, US Initial Jobless Claims, US Pending Home Sales, Japanese Household Spending, Tokyo Core CPI
Oil prices jumped above the $50 level on Wednesday as US crude oil inventories dropped unexpectedly last week. According to the Energy Information Administration's report, domestic crude stockpiles fell 0.6 million barrels in the week ended October 21, following the preceding week's 5.2 million barrel decline, while market analysts anticipated a slight increase of 0.7 million barrels during the reported period. Meanwhile, the American Petroleum Institute's preliminary report released on Tuesday suggested a 4.8 million barrel rise for the same week. Crude oil stocks usually rise at this time of year as the summer driving season ends and refineries enter the autumn turnaround season. The EIA also said that gasoline stocks dropped 2 million barrels, whereas analysts had expectations for a 1 million barrel decline. Moreover, distillate stockpiles were down 3.4 million barrels, surpassing the 1.4 million barrel drop forecast.
After the release, Brent futures were seen trading $0.33 lower at $50.46 per barrel by 14:35 GMT on the New York Stock Exchange, whereas West Texas Intermediate futures were seen trading $0.06 higher at $50.02 by the same time.
US Durable Goods Orders and Pending Home Sales vs. Japanese Household Spending and Tokyo Core CPI
From the US side the most important event will be the US Durable Goods Orders, which measure the cost of orders received by manufacturers for durable goods, which means goods planned to last for three years or more, such as motor vehicles and appliances. As those durable products often involve large investments, they are sensitive to the US economic situation. The final figure shows the state of US production activity. The Core reading, however, excludes the transport sector, providing a clearer reading. Finally, the US Pending Home Sales, which are a leading indicator of trends of the housing market in the US. It captures residential housing contract activity of existing single-family homes. As the housing market is considered as a sensitive factor to the US economy, it generates some volatility for the USD. Meanwhile, from the Japanese side attention should be paid to the Overall Household Spending. It is an indicator that measures the total expenditure by households. The level of spending can be used as an indicator of consumer optimism. It is also considered as a measure of economic growth. Another event is the Tokyo Core CPI, which is a measure of price movements obtained by comparison of the retail prices of a representative shopping basket of goods and services, excluding fresh food. The index captures inflation in Tokyo. The purchase power of JPY is dragged down by inflation.USD/JPY to continue moving upwards
The Greenback managed to edge higher against the Japanese Yen for the third consecutive day yesterday, therefore, exiting its nearly three-week consolidation trend. As a result, the Buck now has the potential to reach a new three-month high, with the closest obstacle being the 105.10 level, where the weekly R2 and the upper Bollinger band are located. Technical indicators are bolstering the possibility of the bullish outcome, as they keep giving respective signs. Moreover, despite the USD/JPY pair experiencing some stagnation in the past few weeks, since the end of September the overall trend has been clearly bullish, with the trend-line remaining intact.Daily chart
Despite some attempts to breakout from the ascending channel pattern, the USD/JPY currency pair returned within its borders yesterday, continuing to trade in its relatively tight range today. The picture on the hourly chart supports the outlook of the daily one, also suggesting that more bullish momentum is likely to come, with the area around 105.00 being the ceiling.
Hourly chart
Bulls take up only 55% of the market today (previously 56%), while the portion of buy orders slid from 59 to 56% over the day.
Meanwhile, there has been no change in the number of long positions at other brokers. Right now 54% of OANDA clients are bulls, same as on Wednesday. Meanwhile, Saxo Bank clients are also as bullish as on Wednesday, being that the portion of longs still takes up 56% of the market.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between September 27 and October 27, traders expect the US Dollar to appreciate to 105.51 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 80% of all forecasts fall above 102 yen, which is close to the current spot price. By far the most popular interval is 108.00-109.50, chosen by 18% of all the surveyed, compared to popularity of the 105.00-106.50, 106.50-108.00 and 109.50-111.00 intervals.