- 63% of all pending orders are to acquire the American Dollar
- 68% of traders are long the Greenback
- Immediate resistance lies at 111.23
- The closest support rests at 110.27
- Upcoming events: US ADP Non-Farm Employment Change, US Services PMI, FOMC Meeting Minutes
US manufacturing activity rose in line with analysts' expectations last month, a private survey revealed on Monday. The Institute for Supply Management reported its Purchasing Managers' Index for the manufacturing sector came in at 57.2 in March, down from the preceding month's 57.7. However, the figure met market forecasts. Out of the 18 industries, 17 reported growth last month. Data also showed that the sharp oil price rebound contributed most to the manufacturing sector recovery over the past several months. Nevertheless, some manufacturing companies projected activity growth to remain flat in the upcoming months. The New Orders Index came in at 64.5 points, following the February reading of 65.1.
However, the gauge if new orders remained at its three-year highs, suggesting that the sector would remain on a solid growth track. Manufacturers also pointed to rising raw material prices, providing further evidence that inflationary pressures continued to build in the US economy. Meanwhile, Markit reported that the group's PMI for the US manufacturing sector dropped to 53.3 last month, the lowest in six months, compared to the prior month's 53.4, whereas analysts anticipated a slight rise to 53.5 points. Furthermore, Markit said that the New Orders Index came in at its slowest pace since October.
US ADP Non-Farm Employment Change is the main event today
One of the most important fundamental data releases today will be the ADP Non-Farm Employment Change. It is a measure of the change in the number of employed people in the US. A rise in this indicator has positive implications for consumer spending, stimulating economic growth, thus, a high reading is likely to be positive for the USD. Another important release will be the US Services PMI. It is released by both the Markit Economics and the Institute for Supply Management. It captures business conditions in the services sector, and as the services sector dominates a large part of total GDP, the services PMI is an important indicator of the overall economic condition in the US. Finally, the FOMC Meeting Minutes. FOMC stands for the Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.USD/JPY sets eye on 110.00
The US Dollar weakened against the Yen on Tuesday, marking a third consecutive decline. The pair is set for another leg down today, with the weekly S1 still acting as the nearest support at 110.27. This support, however, is unlikely to limit the losses should the US ADP Employment Change reading disappoint, with the 110.00 level open to exposure. Further below lies the descending channel's support line, bolstered by the weekly S2, the monthly S1 and the lower Bollinger band, all marking the expected intraday low. Meanwhile, technical indicators keep giving bearish signals, bolstering the possibility of the bearish scenario.Daily chart
The Buck breached the descending channel pattern to the upside yesterday, but attempts to post further gains could be short-lived. The 200-hour SMA on top of the 111.00 major level is likely to cause a U-turn, while a positive development is still likely to be limited around 111.30.
Hourly chart
Today 68% of traders are long the Greenback (previously 70%), while 63% of all pending orders are to acquire the American Dollar.
Right now 62% of OANDA clients are bulls, compared to 61% on Tuesday, the bullish sentiment has been holding around the same level for some time now. In the meantime, Saxo Bank clients retain a positive outlook towards the US Dollar, being that 69% of their open positions are now long and the remaining 31% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between March 05 and April 05, traders expect the US Dollar to appreciate to 114.26 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 54% of all forecasts fall above 114 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 117.00 and 118.50 yen in three months, with 14% of the survey participants choosing this trading range. At the same time, the second most popular intervals were the 112.50-114.00, the 115.50-117.00, the 118.50-120.00 and the 120.00-121.50 ones, with 12% of survey participants choosing each of them.