- 52% of all pending orders are to buy the US Dollar
- 61% of all open positions are short
- The nearest significant resistance is around 113.00
- Downside potential down to 112.10
- Upcoming Events: US ISM Manufacturing PMI, US Construction Prices m/m, Japanese Monetary Base y/y, BOJ Core CPI y/y
The US economy expanded at a stronger-than-initially-expected pace in the March quarter amid higher consumer spending. The Commerce Department reported on Thursday that the domestic economy grew at an annualised pace of 1.4% in the Q1 of 2017, following the preceding quarter's expansion of 2.1% and surpassing the prior estimate of 1.2% growth. Thursday's data showed that the Q1 growth figure's revision was driven by stronger consumer spending, which climbed 1.1% during the reported period, compared to the preliminary reading of a 0.6% increase. However, that was the weakest reading since the Q2 of 2013.
Despite the GDP upward revision, the Trump administration's plan to lift annual US economic growth to 3% remained challenging. As to the June quarter, weak retail sales figures, sluggish manufacturing production growth and low inflation suggested that the economy failed to regain positive momentum in the Q2. Other data released on Thursday showed that the number of Americans filing for jobless aid rose 2K to 244K in the week ended June 23, whereas analysts anticipated a fall to 241K.
ISM Manufacturing PMI in focus
The most significant economic event in this trading session is the US ISM Manufacturing PMI being published at 1400 GMT. The given index is based on surveyed purchasing managers in the manufacturing industry, thus it may demonstrate some new developments in terms of the health of the US economy. Meanwhile, Japan is to publish two yearly data sets - its monetary base and BOJ core CPI at 2350GMT and 0500GMT, respectively.
USD/JPY tests down-trend
USD/JPY demonstrated slight momentum sideways until mid-Friday when the pair surged up to the 112.60 mark. The given appreciation was not hindered by the 100– and 55-hour SMAs; however, the given lines provided enough support to make a U-turn early today. The US Dollar has approached an intermediate down-trend near the 112.90 mark, suggesting that its direction may turn south. Meanwhile, technical indicators still predict some minor upside potential. Its scope, however, is yet to be seen. From downside, the pair may find support by the 55-, 100– or 200-hour SMAs. In case strong bearish momentum takes over, the main bottom limit for the following 24 hour should be the monthly PP at 111.39, reinforced by all three SMAs on the daily chart.Hourly chart
USD/JPY is testing an intermediate down-trend near the 112.90 mark. Given the strong upside momentum apparent in the morning session, it is possible that the US Dollar breaks this line and edges higher. By and large, the pair is stranded between the monthly PP and R1 at 111.39 and 113.92, respectively, for five consecutive days; thus, any change to this range is unlikely.
Daily chart
Bearish sentiment has increased slightly, as 61% of all open positions are short, compared to 58% on Friday. Meanwhile, 52% of pending orders are still to buy the Greenback.
Traders at OANDA are bullish on the US Dollar, as 56% of open positions are long. Meanwhile, Saxo Bank clients have turned bearish, with 54% of open positions being short.
Spreads (avg, pip) / Trading volume / Volatility
Traders remain bullish on US Dollar
Traders expect that the US Dollar may appreciate up to the 113.83 mark against the Yen in three months' time. 61% of all forecasts fall above the current spot price which is located near the 112.85 mark. The majority of voters expect the US Dollar to cost somewhere between 114.00 and 115.50 yen in early October, with 26% of survey participants choosing this trading range (22% previously).