- 51% of pending orders are to sell the US Dollar
- 66% of all open positions are short
- The nearest significant resistance is around 113.94
- Downside potential down to 112.64
- Upcoming Events: US CPI m/m, US Core CPI m/m, US Core Retail Sales m/m, US Retail Sales m/m, US Industrial Production m/m, FOMC Member Kaplan Speaks, US Prelim UoM Consumer Sentiment
The US Producer Price Index for final demand nudged up 0.1% in June on the back of sustained increases in services cost that managed to offset plunging energy prices, data released by the Labour Department revealed on Thursday. The gain came in as a surprise, as the vast majority of analysts had predicted the index to stay unchanged, and suggested that a recent moderation in inflation was likely temporary. In 12 months through June, the PPI advanced 2.0%, down 0.4% from May's reading, as the energy-led spike was dropped out of the calculation.
Meanwhile, the Core Finished Goods PPI advanced a modest 0.1% over the reported period, missing economists' expectations for a 0.2% uptick and following the 0.3% surge registered in May. Year-on-year, the core PPI climbed 2.0% in June after rising 2.1% in the preceding month. In another report, the Labour Department said the number of Americans filing for unemployment benefits dropped 3K to a seasonally adjusted 247K in the week ended July 8.
Busy day for USD traders
News agenda is relatively light for most major currencies except for the US Dollar. The United States are to release CPI and Retail Sales, including core readings, for the month of June at 1230GMT. Following weak retail sales in May, traders would like to see some signs of recovery. Furthermore, some additional data of intermediate importance are released afterwards, such as monthly industrial production and preliminary consumer sentiment by the University of Michigan at 1315GMT and 1400GMT, accordingly. The FOMC Member Robert Kaplan is set to speak about the Federal Reserve and monetary policy at the Centre for Economic Studies of the Private Sector in Mexico City at 1330GMT.
USD/JPY trades in wedge
During Thursday's trading session, the US Dollar was trading between the weekly PP and S1. The American currency succeeded at surpassing the former early in the morning, but was reserved back in the range after encountering the 200-hour SMA near the 113.50 mark. There is still some downside potential that may be realised in in the upcoming hours. The Dollar has formed a minor descending wedge against the Yen that could be breached soon. A breakout to the upside is the most likely scenario that may occur in this session in case the pair fails to move below the 113.00 mark. Nevertheless, an upside surge may be hindered or even stopped at the 200– or 100-hour SMAs, while gains should be capped at the monthly R1 circa 114.00.Hourly chart
USD/JPY closed below the weekly PP on Thursday with slight gains near the 113.30 mark. Thus, it remains stranded between the weekly PP and S1 at 113.41 and 112.64, respectively. Even though the US Dollar has already been pushed above the former for a limited period of time, the current narrow candle suggests that traders are indecisive towards the pair.
Daily chart
The bearish market sentiment prevails in this session, as 66% of all open positions are short, compared to 67% on Thursday. In addition, 51% of pending orders are to sell the US Dollar.
OANDA clients have turned bearish on the US Dollar, with 55% of traders holding short positions. Meanwhile, Saxo Bank clients have returned in the bearish territory, as the number of short positions in this session is 52%.
Spreads (avg, pip) / Trading volume / Volatility
Traders bullish on US Dollar
Traders expect the Greenback to appreciate up to the 113.78 mark against the Japanese Yen in three months' time. Currently, 65% of all forecasts are strongly bullish, being located above the current spot price. Nevertheless, the majority of voters still expect the US Dollar to cost somewhere between 114.00 and 115.50 yen mid-October, with 29% of survey participants choosing this trading range.