- The number of purchase orders inched up from 59 to 60%
- 54% of traders are long the US Dollar
- Immediate resistance lies at 113.65
- The closest support rests around 112.94
- Upcoming events: US Jobless Claims, US New Home Sales, US Markit Services PMI
US crude oil inventories rose more than expected last week, official figures revealed on Wednesday. According to the Energy Information Administration's weekly report, US crude stockpiles climbed 2.8 million barrels in the week ended January 20, following a 2.3-million-barrel increase in the preceding week and surpassing market analysts' expectations for a 1.5-million-barrel build up. As a result, the price of Brent crude oil dropped $0.53 to $54.91 per barrel, while the price of West Texas Intermediate oil futures fell $0.42 to $52.76 per barrel. Earlier this week, the American Petroleum Institute reported a rise of 2.9 million barrels in crude oil inventories for the past week. According to Bernstein Energy, global oil inventories decreased 24 million barrels to 5.7 billion barrels on a quarterly basis in the three month period to December of 2016 amid OPEC's decision to reduce its production levels.
In the meantime, oil production in the United States climbed more than 6% since the middle of 2016, remaining just 7% below its 2015 record high. In addition, future interest rate hikes by the Federal Reserve are likely to push oil prices lower in 2017. However, analysts continue to suggest strong growth for the sector, pointing to the US President Donald Trump's promises to cut regulations on oil and gas production.
US Services PMI, Initial Jobless Claims and New Home Sales
Today one of the economic data releases to pay attention to is the US Services PMI. The Services PMI captures business conditions in the services sector. As the services sector dominates a large part of total GDP, the Services PMI is an important indicator of the overall economic condition in the US. Another event will be the Initial Jobless Claims, even though they have a limited impact on the exchange rates, they still are an important sign of the US employment situation. They are a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength on the labor market. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy. Finally, the US New Home Sales, which are an important measure of housing market conditions. House buyers spend money on furnishing and financing their homes, so as a result the demand for goods, services and the employees is stimulated.USD/JPY attempts to break the down-trend
The USD/JPY currency pair experienced another leg down on Wednesday, thus, reconfirming the bearish trend-line. However, the Buck managed to retain its position above the 113.00 mark, indicating a possible rebound today. The four-week down-trend and the monthly S1 are still providing relatively strong resistance, which could keep the pair at bay. Technical studies are also in favour of the negative outcome, suggesting the down-trend is to be preserved. In case the immediate resistance is pierced, the next target will be the cluster around 114.35, formed by the weekly PP and the 55-day SMA. Meanwhile, the main target from below is still the 112.59 psychological demand level.Daily chart
Even though the US Dollar bounced back from the 200-hour SMA yesterday, the resistance around the 114.00 mark is unlikely to hold due to the excessive bullish momentum. As a result, the pair could retest the down-trend of the hourly chart.
Hourly chart
Today 54% of traders are long the US Dollar (previously 51%). At the same time, the number of purchase orders inched up from 59 to 60%.
Right now 52% of OANDA clients are bulls, unchanged since Wednesday. In the meantime, Saxo Bank clients are barely managing to remain on the bullish side, being that 55% of their open positions are now long and the remaining 45% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between December 26 and January 26, traders expect the US Dollar to appreciate to 117.56 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 52% of all forecasts fall above 117 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 111.00 and 112.50 yen in three months, with 16% of the survey participants choosing this trading range. At the same time, the second most popular intervals were the 115.50-117.00 and the 123.00-124.50 ones, with 11% of survey participants choosing them.