- The share of buy orders inched down from 57 to 53%
- 55% of traders hold long positions
- Immediate resistance lies around 111.07
- The closest support rests at 110.20
- Upcoming events: US Durable and Core Durable Goods Orders, US Goods Trade Balance, US Pending Home Sales, US Initial Jobless Claims
Last week, US crude oil inventories dropped more than expected, while gasoline and distillate stocks rose markedly, owing to increased production at refineries. The EIA reported on Wednesday that US crude stockpiles fell 3.6M barrels in the week ending April 21, following the preceding week's decline of 1.0M barrels and surpassing expectations for a 1.1M barrel decrease. It marked the third consecutive weekly decline in crude oil inventories and provided support to oil prices. At this time of the year refineries start boosting production ahead of the summer driving season. Therefore, crude inventories are set to fall further, pushing the oil price higher. Refineries' production rose 347,000 barrels per day to 17.3M barrels per day, while the utilisation rate climbed 1.2% to 94.1%, the highest since November 2015. Crude imports rose to 7.8M barrels per day, whereas exports climbed to 1.2M barrels per day, the highest since February 17.
Nevertheless, consumption remained subdued, as total production demand dropped 2.2% on an annual basis to 19.5M barrels per day. The EIA also said that gasoline stockpiles advanced 3.4M barrels, while analysts anticipated a 1.0M barrel decline. Moreover, distillate stocks climbed 2.7M barrels, topping expectations for a 1.0M barrel fall.
US Durable Goods Orders are the main event today
Today all eyes are mostly on the US fundamentals. First, the US Initial Jobless Claims, 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 labor market. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy. A more significant event will be the US Durable Goods Orders, as they 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 Durable Goods Orders, however, exclude the transport sector. Finally, the US Pending Home Sales, which are a leading indicator of trends of the housing market in the US. The indicator 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. Additionally, early morning tomorrow the BoJ is to decide on its Policy Rate, make a Monetary Policy statement and release an Outlook Report. This releases could significantly strengthen the Yen, while also spark Yen-selling.USD/JPY struggles to hover over 111.00
The USD/JPY currency pair remained relatively unchanged yesterday, with the 111.00 major level limiting downside volatility. The weekly R3 that was on the pair's path appears to be unable to provide support or resistance, thus, more focus should be on the cluster around 110.20 and the one around 112.15. From a broad technical perspective the Greenback should continue moving up until the descending channel's resistance line is reached; however, the mentioned supply area circa 112.15 could apply sufficient pressure on the Buck, resulting in another drop even back under 110.00. At the moment the US Dollar's main goal is to manage to retain its positions above 111.00.Daily chart
Yesterday the USD/JPY pair retested the broadening rising wedge's resistance line, which contributed to erasing intraday gains. The situation contradicts with the outlook on the daily chart, as here the Buck has little space for another leg up. A slip under 110.00 seems more probable, in which case the support, formed by the 200-hour SMA and the wedge's lower boundary, would be retested and most likely reconfirmed.
Hourly chart
There are 55% of traders holding long positions today, compared to 62% yesterday. The share of buy orders inched down from 57 to 53%.
Right now 56% of OANDA clients are bulls, compared to 60% on Wednesday, 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 54% of their open positions are now long and the remaining 46% 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 27 and April 27, traders expect the US Dollar to appreciate to 110.83 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 51% of all forecasts fall under 111 yen, which is still above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 112.50 and 114.00 yen in three months, with 17% of the survey participants choosing this trading range. At the same time, the second most popular interval was the 108.00-109.50 one, with 14% of survey participants it.