- Purchase orders take up 57% of the market
- 51% of all open positions are long
- Immediate resistance lies around 112.10
- The closest support rests at 111.07
- Upcoming events: US Advance GDP, US Employment Cost Index, Chicago PMI, Michigan Consumer Sentiment
Orders for US-manufactured goods rose less than experts estimated in March, official figures revealed on Thursday. The US Department of Commerce reported that orders for durable goods in March soared only 0.7%, following the previous month's increase of 1.8%. Excluding transportation items, orders for core durable goods plunged 0.2%, while analysts anticipated 0.4% growth. This negative figure represented the first decline since June 2016. The main cause of March's drop was associated with weaker demand for automobiles, fabricated metal products and machinery. Namely, the number of orders for motor vehicles tumbled 0.8%, the slowest rate of growth in the last 25 months. At the same time, orders for fabricated metal products slipped 0.8%, whereas machinery orders fell 0.2%. In contrast, bookings in the civil aircraft sector jumped 7%.
Furthermore, the number of orders for defence equipment advanced 12%. According to analysts, the slowdown at the end of the Q1 was mainly driven by the strong US Dollar, struggles in the energy sector and the weather-related factors. Nevertheless, they believe that businesses are going to increase their capital expenditures in the near future amid the US President Donald Trump's announced tax reform.
US GDP and Employment Cost Index
Today, the US GDP is one of the main economic data releases. The GDP shows the monetary value of all the 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 a country's economy is growing or decreasing. In addition to that, the US Employment Cost Index is also to be released today. It is a quarterly measure of the change in the price of labor, defined as a compensation per employees hour worked. Closely watched by many economists, the ECI is an indicator of cost pressures within companies that could lead to price inflation for finished goods and services. The index measure changes in the cost of compensation not only for wages and salaries, but also for an extensive list of benefits. Some attention could also be paid to the Chicago PMI, as it captures business conditions across Illinois, Indiana and Michigan. This index is an indicator of business trends and it is interrelated with the ISM manufacturing index. It is widely used to indicate the overall economic condition in the US.USD/JPY still hovers over 111.00
Thursday ended with the US Dollar outperforming the Yen, therefore, leaving the 111.00 handle intact. The situation barely changed from yesterday, meaning that the USD/JPY pair still has sufficient room for another leg up, as the nearest resistance rests only circa 112.10. At the same time, the weekly R3 is unable to provide strong support, with the nearest significant demand area being only around 110.15. According to technical indicators, the exchange rate is unlikely to change significantly today.Daily chart
After having touched the broadening rising wedge's resistance line on Wednesday, the USD/JPY currency pair appears to have begun edging lower. Technically, the Buck should weaken once again today and keep weakening until the 110.00 mark is reached, where a rebound is expected to occur.
Hourly chart
Bulls are now barely outnumbering the bears, as 51% of all open positions are long, compared to 55% previously. The number of orders to buy the Greenback returned to its Wednesday's level. The purchase orders now take up 57% of the market (yesterday 53%).
Right now 55% of OANDA clients are bulls, compared to 56% on Thursday, the bullish sentiment has been holding around the same level for some time now. In the meantime, Saxo Bank clients barely manage to retain a positive outlook towards the US Dollar, being that 53% of their open positions are now long and the remaining 47% 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 28 and April 28, traders expect the US Dollar to appreciate to 110.82 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 16% of the survey participants choosing this trading range. At the same time, the second most popular intervals were the 108.00-109.50 and the 115.50-117.00 ones, with 13% of survey participants each of them.