- 57% of all pending orders are to buy the Buck
- 62% of all open positons are now long
- Immediate resistance lies around 112.15
- The closest support rests at 111.07
- Upcoming events: US Crude Oil Inventories, US Durable and Core Durable Goods Orders, US Goods Trade Balance, US Pending Home Sales, US Initial Jobless Claims
The Conference Board Consumer Confidence Index dropped more than experts estimated. In April, it lost 3.8% and reached 120.3, thus, marking the first decline since January. The fall was mainly attributable to the less optimistic view of business conditions and the labour market in the upcoming six months. As a result, the number of respondents, who evaluated business conditions as "good", decreased from 32.4% to 30.2% and the share of those, who assessed the available number of jobs in the market as "plentiful", plunged from 31.8% to 30.8%.
In addition, the number of people who evaluated business conditions as "bad" increased slightly from 13.1% to 13.8%. Yet, the share of consumers that believed jobs were "hard to get" remained unchanged at 19.1%. The Conference Board's data confirmed the view that in the short-run consumers would likely to limit their spending and put more emphasis on savings accumulation. Tuesday's data also showed that the number of people, who thought that business conditions would worsen over the next six months, rose from 8.5% to 10.9%, while the share of those expecting weaker job creation surged from 12.7% to 13.1%. Nevertheless, the majority of respondents still believed that the economy would continue growing in the months ahead.
No significant events until Thursday
There are no macroeconomic data releases worth paying attention to, thus, all focus turns to tomorrow's events, and mainly from the US side. 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 attempts to remain above 111.00
Yesterday the Buck slightly exceeded expectations, as it managed to appreciate beyond the 111.00 level against the Japanese Yen. With the breach of this mark the US Dollar now has the opportunity to continue outperforming the Yen. However, before reaching the descending channel's upper boundary, there is still one resistance the pair has to pierce on its path, namely the cluster around 112.15, formed by the 55-day SMA, the upper Bollinger band and the monthly pivot point. On the other hand, after Tuesday's strong rally the Greenback could take a breath and ease on gains, but ultimately no significant changes in either direction are expected today due to absence of solid market movers.Daily chart
The USD/JPY currency pair appears to have formed a broadening rising wedge pattern on the hourly chart, where it remained for one and a half weeks now. According to the pattern, the Buck is likely to edge significantly lower, back under 110.00, and retest the support line circa 109.70. The 200-hour SMA should contribute to a rebound and help prolong the wedge.
Hourly chart
For the fifth consecutive time market sentiment worsened, with 62% of all open positons now being long (previously 68%). Meanwhile, the portion of order to buy the Greenback edged lower, namely from 60 to 57%.
Right now 60% of OANDA clients are bulls, compared to 62% on Tuesday, 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, although significantly weaker than yesterday, being that 55% of their open positions are now long and the remaining 45% 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 26 and April 26, traders expect the US Dollar to appreciate to 110.79 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 52% 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 114.50 yen in three months, with 16% 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.