- The portion of purchase orders inched lower from 61 to 56%
- Bullish market sentiment remains unchanged at 70%
- Immediate resistance lies at 109.30
- The closest support rests around 108.90
- Upcoming events: US President Trump's Speech, US Import Prices, US Federal Budget Balance, US PPI and Core PPI, US Initial Jobless Claims
US crude oil inventories dropped more than expected last week, official figures revealed on Wednesday. The Energy Information Administration reported on Wednesday that US crude stocks fell 2.2M barrels in the week ended April 7, following the preceding week's gain of 1.6M barrels. In the meantime, market analysts anticipated a slighter drop of 700,000 barrels during the reported period. The EIA reported also that refineries produced on average 9.9M barrels of gasoline per day and 5.1M barrels of distillate per day. Furthermore, gasoline inventories dropped 3M barrels last week, boosting market sentiment. Despite a bigger than expected drop in US crude oil inventories, oil prices fell from their five-week highs, reached last week after the United States launched a set of airstrikes against the Syrian government.
However, oil prices managed to continue trading above $55. Earlier in the day, OPEC released promising reports that showed that production dropped more than initially expected last month. Nevertheless, OPEC revised up its forecast for supplies from non-member countries in 2017. OPEC and other oil producers agreed in November to cut output by 1.8M barrels per day during the first half of 2017 in order to stabilise the oil market.
US Jobless Claims and PPI are the only relevant events today
On Thursday, once again focus turns to the US fundamentals, namely the Initial Jobless Claims, the PPI and Core PPI. The initial Jobless Claims measure the number of individuals who are unemployed and are currently receiving unemployment benefits. They present the strength in the labor market. A rise in this indicator has negative implications for consumer spending, which discourage economic growth. As for the US PPI, it measure the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation. In Core PPI, however, those volatile products, such as food and energy, are excluded in order to capture an accurate calculation.USD/JPY attempts to erase Wednesday's losses
The USD/JPY currency pair experienced another leg down on Wednesday, causing the descending channel's support line to be reconfirmed. From a technical perspective another decline is doubtful, as the channel's support line is now also reinforced by the weekly S3 and the 200d-day SMA. Although the Greenback has a number of resistances on its path today, those are not expected to prevent the US Dollar from recovering today, despite technical indicators suggesting otherwise. However, gains are likely to be capped near 110.00, with the exchange rate beginning its journey towards the channel's upper border.Daily chart
The situation on the hourly chart only confirms the outlook of the daily one, as the descending channel's trend-line also received a confirmation. Technically, the USD/JPY pair should now rebound, paving its way towards the 200-hour SMA, expected to reach it circa 110.30.
Hourly chart
Bullish market sentiment remains unchanged at 70%, while the portion of purchase orders inched lower from 61 to 56%.
Right now 62% of OANDA clients are bulls, slightly lower than 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 67% of their open positions are now long and the remaining 33% 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 13 and April 13, traders expect the US Dollar to appreciate to 112.11 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 62% of all forecasts fall under 114 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 108.00 and 109.50 yen in three months, with 18% of the survey participants choosing this trading range. At the same time, the second most popular interval was the 115.50-117.00 one, with 14% of survey participants choosing it.