- The portion of orders to acquire the US currency edged down from 75 to 53%
- Bullish traders' sentiment remains unchanged at 56%
- The 55-day SMA, the weekly PP and the 38.20% Fibo around 106.30 represent immediate resistance
- Support is at 105.11
- 53% of the survey participants expect the US Dollar to cost less than 108.00 yen in three months
- Upcoming events: US Initial Jobless Claims, US Natural Gas Storage, Japanese Household Spending, Tokyo Core CPI, Japanese National Core CPI, Japanese Unemployment Rate, Japanese Retail Sales, BoJ Monetary Policy Statement
For the second consecutive month, orders for long lasting factory goods made in the United States fell, fresh figures from the US Census Bureau revealed on Wednesday. Excluding transportation equipment, new orders for durable goods fell 0.5% on a seasonally adjusted basis in June, compared to the previous month's downwardly revised drop of 0.4%, whereas market analysts expected core durable goods orders to advance 0.3% in the reported month. Overall orders for US manufactured durable goods decreased 4.0% in June, following last month's revised fall of 2.3% and falling behind the 1.1% drop forecast. Other data released by the Energy Information Association on Wednesday showed that US crude oil inventories added 1.7 million barrels in the week ended July 22, after the 2.3 million barrel fall registered in the previous seven days, while economic desks penciled in a decrease of 2.1 million barrels in the reported period.
The durable orders report stands in contrast to other recent data suggesting the US manufacturing sector stabilized in June. A Federal Reserve report showed manufacturing output was modestly above year-earlier levels in June.
Vatsal Srivastava, director at the Blackwater Consulting, explained why the US Dollar advanced against the Yen last week. He said there was nothing fundamentally driving USD/JPY on Monday, but one of the key drivers was the falling oil prices, which was actually boosting the Yen; in analyst's opinion, as there was an addition cause for more QQE. Vatsal Srivastava also mentioned that "it is going to be a hard economic ride ahead and there seems to be no light on the horizon for Japan as of now." "Lets hope for the best," he summed up.
US Jobless Claims is the only event on Thursday
From the US side only the Initial Jobless Claims are due today. They 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. From the Japanese side the National Core CPI is to set the mood for early trade on Friday. It is a measure of price movements obtained by comparison of the retail prices of a representative shopping basket of goods and services. CPI is most significant way to measure changes in purchasing trends. The purchase power of JPY is dragged down by inflation. However, the most important event will be the BoJ Monetary Policy meeting tomorrow.USD/JPY to continue sliding down
The Buck managed to outperform the Japanese currency yesterday, but barely succeeding in climbing over the 105.00 major level. Despite the miraculous rally, the Yen is expected to post gains against the US Dollar once again today, therefore, returning to the trading range between 104.00 and 105.00. A drop lower is unlikely, as the pair is supported by a strong cluster around 104.20, formed by the weekly S2, the monthly PP and the 20-day SMA. Technical indicators in the daily timeframe are unable to confirm this scenario, but the weekly and the monthly ones suggest the Greenback is to keep declining against the Yen.The US Dollar keeps declining against the Japanese Yen, unable to pierce the five-day resistance line. Today the USD/JPY pair is also supported by another possible trend-line, which first emerged on July 8, but another confirmation of the line is required to determine its credibility.
Hourly chart
Bullish traders' sentiment remains unchanged at 56%, but the portion of orders to acquire the US currency edged lower today, namely from 75 to 53%.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 57% of positions opened by its clients are long. Similarly, 58% of positions opened by Saxo Bank traders are long as well, compared to 53% on Wednesday.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to fall below 108.00 yen
Exactly half of the surveyed (53%) now assume that the US Dollar is to cost less than 108.00 yen after three month time. The most popular choice, however, implies that the Greenback is to cost between 108.00 and 109.50 yen in three months, selected by 20% of the voters. According to the votes collected between June 28 and July 28, the mean forecast for Oct 28 is 106.44. At the same time, 15% of the surveyed believe the Greenback could cost more than 112.50 yen in three months.