- The number of orders to acquire the Greenback inched up from 57 to 62%
- 73% of all open positions are long
- Immediate resistance lies at 109.17
- The closest support rests around 108.75
- Upcoming events: US Building Permits, US Housing Starts, US Capacity Utilization Rate, US Industrial Production
Manufacturing activity in the New York State fell markedly in April, raising concerns over economic growth in the Q2 of 2017, a survey revealed on Monday. The New York Federal Reserve reported that its Empire State Manufacturing Index came in at 5.2 for April, following the preceding month's reading of 16.4. Meanwhile, market analysts anticipated a slight drop to 15.2 points during the reported month. Data showed that 35% of the survey respondents said that business conditions had improved, while 30% claimed that they has worsened over the reported month. The New Orders Index plunged 14 points to 7.0, while the Unfilled Orders Index rose slightly to 12.4. On the positive side, the Employment Index jumped to its two-year high of 13.9 points in April, confirming the view that the US labour market is at or near full employment. The survey respondents also pointed to modestly rising input prices and increasing working hours. The respondents also expressed optimism of the long-term prospects of the US economy, with the Future Situation Index rising three points to 39.9 and the Future New Orders and Shipments Indexes decreasing slightly.
Moreover, both Future Capital Expenditures and Future Technology Spending Indexes surged to 27.7 and 15.3 points, respectively.
Second-class US data due today
Tuesday brings some US fundamental data, such as the Building Permits. They show the number of permits for new construction projects. It implies the movement of corporate investment and tends to cause some volatility to the USD. Another data release will be the Industrial Production. It shows the volume of production of US industries, such as factories and manufacturing. Up-trend is regarded as inflationary, which may anticipate interest rates to rise. Finally, the Capacity Utilization Rate. It is the percentage of the US production capacity which is actually used over the short-time period. It is indicating of overall growth and demand in the US economy. A high capacity utilization stimulates inflationary pressures.USD/JPY attempts to preserve the channel pattern
Despite initial sharp downside volatility, the US Dollar managed to end the day in the green zone yesterday, adding 14 pips against the Japanese Yen. The recovery suggests that the channel pattern remains in play, but with the lower bounder now being significantly weaker. A successful rally today could be the first step towards reaching the pattern's resistance line near 112.00, but technical indicators are unable to confirm this scenario. Downside risks are also present due to the recent breach, but the US fundamental data could provide the required boost for the given pair to stabilise above 109.00.Daily chart
According to expectations, the USD/JPY currency pair managed to rebound on Monday, climbing back above the trend-line. Although the pair seemingly is on the verge of preserving the descending channel pattern, the 200-hour SMA could still trigger a sell-off. A surge above the SMA would imply the pattern has been prolonged.
Hourly chart
There are 72% of traders holding long positions today, whereas 57% of all pending orders are to acquire the US Dollar.
Right now 62% of OANDA clients are bulls, compared to 61% on Monday, 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, with their sentiment being close to ours, being that 69% of their open positions are now long and the remaining 31% 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 18 and April 18, traders expect the US Dollar to appreciate to 111.92 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 64% of all forecasts fall under 114 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 108.00 and 109.50 yen in three months, with 15% of the survey participants choosing this trading range. At the same time, the second most popular interval was the 115.50-117.00 one, with 13% of survey participants choosing it.