- 52% of all pending orders are to buy the US Dollar
- 56% of all open positions are short
- The nearest significant resistance is around 113.94
- Downside potential down to 113.07
- Upcoming Events: US Factory Orders m/m, US IBD,TIPP Economic Optimism, FOMC Meeting Minutes
US manufacturing activity rose more than expected last month, official figures showed on Monday. The Institute for Supply Management reported its Purchasing Managers' Index for the manufacturing sector increased to 57.8 in June, up from 54.9 registered in the preceding month. That marked the strongest reading since August 2014, reflecting improvements in economic conditions both within the country and abroad. The report showed that 15 of 18 sectors tracked by the ISM expanded in June.
Moreover, the New Orders Index jumped to 63.5 last month from 59.5 in May, while production surged to 62.4. Furthermore, the Prices Paid Index fell to this year's lowest level of 55.0, though, the reading above 50 point level still indicated higher prices of raw materials. Overall, the ISM survey suggested that the US economy would show a sharp rebound for the June quarter. After the release, the Atlanta Fed raised its second-quarter GDP growth forecast to a 3.0% annual rate, up from 2.7% expected earlier. In addition, experts suggest that higher overseas demand is likely to support rising confidence in the global economic outlook.
FOMC Meeting Minutes
Following a Bank Holiday on July 4, the economic calendar for this trading session is full of data from the Unites States. The country is set to publish m/m factory orders and IBD/TIPP Economic Optimism at 1400 GMT. The greatest significance for this pair, however, is certainly put on the FOMC Meeting Minutes at 1800 GMT.
USD/JPY set for appreciation
USD/JPY was trading in the 112.85/113.30 area on Tuesday's trading session. The Greenback was appreciating slightly against the Yen prior to being pushed lower late in the evening. The pair subsequently regained its upward momentum, bouncing off the lower Bollinger band and crossing the 55-hour SMA at 113.20. Today's bullish indicators suggest that a rise in price is likely to occur, especially in the upcoming 24 hours. The scope of the upward momentum is yet to be seen, as no resistance up to the monthly R1 at 113.94 exist. In case of strong upside risks, this level may be reached. The nearest support is formed by the 55– and 100-hour SMAs at 113.07 and 112.70, respectively. The latter may likewise be regarded as a possible bottom limit.Hourly chart
The Greenback faces a significant support cluster formed by the 100-, 55, 200- and 20-hour SMAs and the monthly PP in the 111.00/112.00 area. Meanwhile, gains may be capped near the monthly R1 at 113.94.
Daily chart
SWFX market sentiment is bearish, as 56% of all open positions are short, compared to 59% on Tuesday. Meanwhile, 52% of pending orders are still to buy the Greenback.
Traders at OANDA remain bullish on the US Dollar, as 52% of open positions are long. Meanwhile, Saxo Bank clients are bearish, with 55% 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 113.73 mark against the Yen in three months' time (113.86 on Tuesday). 61% of all forecasts fall above the current spot price which is located near the 113.25 mark. The majority of voters expect the US Dollar to cost somewhere between 114.00 and 115.50 yen in early October, with 25% of survey participants choosing this trading range (-1%).