- Purchase orders take up 52% of the markeЕ
- 58% of all open positions are short
- The nearest resistance is around 112.70
- Immediate support rests at 111.65
- Upcoming events: US GDP, US Durable and Core Durable Goods Orders, Michigan Consumer Sentiment
The number of Americans filing for unemployment benefits rose less than expected last week, official data showed on Thursday. The Labour Department reported that initial jobless claims rose 1K to 234% in the week ended May 19, following the preceding week's upwardly revised 233K. Meanwhile, market analysts anticipated an increase of 5K to 238K during the reported week. That marked the 116th of claims remaining below the 300K level, the longest stretch since 1973. The four-week moving average of claims, considered to be a better measure of the labour market trends, dropped 5.75K to 235.25K last week, the lowest since April 1973.
Thursday's report also showed that continuing jobless claims advanced 24K to 1.92M in the week ending May 13, whereas their four-week moving average declined 16K to 1.93M, the lowest since January 1974. The combination of strong data on the labour market, retail sales and industrial output suggested that the US economy regained positive momentum in the second quarter. Despite the stronger-than-expected release, the US Dollar edged lower against other major currencies.
Upcoming events: US GDP and Durable Goods Orders
The last day of the week brings rather important US fundamental data, such as the GDP reading. GDP shows the monetary value of all goods, services and structures produced within a country in a given period of time. It is a gross measure of market activity because it indicates the pace at which the country's economy is growing or decreasing. Another important data release will be the US Durable Goods Orders. The Order are a measurement of 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. Meanwhile, the ‘Core' Durable Goods Orders exclude the transport sector.
USD/JPY still anchored to 55-day SMA
The Greenback successfully outperformed the Japanese Yen on Thursday, causing another setback in the anticipated decline towards 111.00. Treasury yields keep weighing on the Buck, thus, a negative outcome is most likely today, despite technical indicators being unable to confirm this possibility. The weekly PP and the 55-day SMA now form immediate support, but are likely to fail at holding the losses. The main target at the moment is the 111.00 handle, but a drop that low is yet uncertain, as fundamental data could have a bullish effect on the USD/JPY pair today, in which case intraday losses have a solid chance of completely being erased.Daily chart
The rising wedge did not last for long, having breached it to the downside earlier today, as the 200-hour SMA provided sufficient resistance to cause this breakout. The US Dollar can now easily drop towards 110.50 – a level where psychological support is considered to be relatively strong, meaning that this is a possible turnaround point.
Hourly chart
Traders remain bearish towards the US Dollar, with 58% of all open positions being short. Purchase orders take up 52% of the market.
At the moment, 55% of OANDA clients are long the US Dollar against the Yen, while the remaining 45% are short. In addition, Saxo Bank clients' sentiment remained unchanged over the last 24 hours, as 58% of their open positions are now long.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between April 26 and May 26, traders expect the US Dollar to appreciate to 113.15 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 69% of all forecasts fall above 111 yen, which is above the current spot price. The majority of people who voted expect the US Dollar to cost somewhere between 115.50 and 117.00 yen in three months, with 23% of survey participants choosing this trading range. Furthermore, the 112.50-114.00 range was the second most popular one, with 16% of the voters choosing it.