- 52% of all pending orders are to buy the Bcuk
- 57% of all open positions are short
- The nearest resistance is around 111.65
- Immediate support rests at 110.45
- Upcoming events: US Initial Jobless Claims, US Goods Trade Balance
US crude oil inventories dropped for the seventh consecutive time last week, official figures revealed on Wednesday. The Energy Information Administration reported that US crude stockpiles fell 4.4M barrels in the week ended May 19, following the preceding week's decrease of 1.8M barrels and surpassing expectations for a 2.4M barrel decline. Thus, inventories hit 516.3M barrels, the lowest level since mid-February, suggesting that the OPEC production cut deal began working. The data came out a day before the OPEC meeting in Vienna, Austria. Analysts expect that OPEC and non-OPEC countries will likely extend the deal for six more months. Refinery production climbed 159K barrels per day to 17.281M bpd during the reported week, whereas the refinery utilisation rate advanced 0.1% to 93.5%.
The four-week average of crude exports rose 30% to 4.7M bpd last week, compared to the same period a year ago. The EIA also reported that inventories at the Cushing, Oklahoma, dropped 741K barrels last week. Oil prices rose shortly after the releases, with WTI futures hitting $51.88 per barrel, the highest since April 19.
US Initial Jobless Claims are the only relevant event today
Thursday is going to be a rather quiet day in terms of economic data releases, with the only seemingly significant one being the US Initial Jobless Claims. They are a measure of the number of people filing first-time claims for state unemployment insurance. In other words, they provide 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. No significant changes are expected.
USD/JPY stuck between 110.50 and 112.00
The US Dollar weakened against the Yen on Wednesday, but managed to avoid serious losses by closing at 111.50. However, further bullish potential is now under question, as the 55-day SMA and the weekly pivot point are once again acting as an immediate supply area. A drop back under 111.00 is always possible, due to lack of supports around that area, leaving the monthly PP at 110.48 as the only possible turnaround point unless losses exceed 150 pips. Technical indicators are unable to confirm the possibility of either the negative or the positive outcome, thus, we should not rule out the chance of another leg up and the potential retake of the 112.00 mark.Daily chart
The USD/JPY pair's inability to pierce the 200-hour SMA yesterday caused the rising wedge pattern to emerge. Now the pair is supported by the wedge's lower border, which should prevent it from experiencing more weakness and fall towards 111.00. This contradicts with the daily outlook, however, wedges often break to the downside, in which case it would fully fall in line with expectations.
Hourly chart
Traders' sentiment remains bearish, with 57% of all open positions being short. Meanwhile, 52% of all pending orders are to buy the Buck.
At the moment, 58% of OANDA clients are long the US Dollar against the Yen, while the remaining 42% are short. In addition, Saxo Bank clients' sentiment slightly improved over the last 24 hours, as 61% 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 25 and May 25, 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 sabove 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 22% of survey participants choosing this trading range. Furthermore, the 112.50-114.00 range was the second most popular one, with 18% of the voters choosing it.