- Share of buy orders grew even further compared to the previous report, from 66 to 82%
- Significant majority of open positions is long, namely 60%
- 17% of traders see USD/JPY above 124.5 by mid-May
- FXPro and Caxton FX: USD/JPY to aim for 135
- Upcoming events: US Crude Oil Inventories, Bond Auction
Job openings surged more than expected in December, with the headline figure reaching the highest level in 14 years. The monthly JOLTS data is a favourite of Fed Chairwoman Janet Yellen and the strong reading could trigger a relatively hawkish assessment of the labour force. The US labour market created 5.028 million jobs at the end of December, compared with a revised 4.847 million seen in the previous month. That is the highest level since January 2001. The quits rate, a measure of the number of people, who leave their current employer and often considered as an indicator of optimism of available jobs, remained unchanged at 1.9%. The data echoed last week's monthly jobs report, which showed that businesses continued adding jobs at a solid pace. Employers added 257,000 jobs in January, and wages rose at the fastest one-month pace in six years.
Federal Reserve Governor Jerome Powell said that the US unemployment rate underestimates labour market slack, adding that job creation has been robust, and looks set to continue on a sustainable path. Powell said the current 5.7% rate of unemployment did not accurately reflect the numbers of discouraged workers and others who may be willing to re-join the labour force should market conditions improve. Powell added that the natural unemployment rate may now be as low as 5% or less.
Banking holiday in Japan
It is a banking holiday in Japan today, and news from the United States will be limited to the crude oil inventories and 10-year bond auction, decreasing the chance of significant changes in the exchange rates.
USD/JPY closes in on 120
Simon Smith, Chief Economist at FXPro, is expecting the Yen to weaken throughout 2015. He does not rule out a possibility of USD/JPY surging up to 135, reasoning that the Japanese government is going to push ahead with the policy measures to prop up economic growth.
Nicholas Ebisch from Caxton FX shares a similar view, anticipating moderate appreciation of the US Dollar against the Yen over the next 12 months. He forecasts the currency pair to go up to 125 by April. According to the analyst, by the end of 2015 the rate may well achieve the level of 135, on the condition the US macroeconomic indicators do not fall behind the expectations and the Japanese officials introduce more easing measures to prompt up inflation.
Yves Perreard, CEO of Perreard Partners Investment, appears to be less confident in bullishness of USD/JPY in the short term. He expects the Japanese Yen to strengthen in the coming months pulling the pair to 115 by the end of March because of "repatriation of the pension funds" and "lack of foreign investment". However, in the longer run Perreard is also bullish the US Dollar, reckoning the rate will then recover to 120 by the mid-year.
Daily chart
After a brief stop USD/JPY resumed the advance. The currency pair is confidently approaching a cluster of resistances around 120 implied by the weekly and monthly R1 levels. While there is also likely to be a correction similar to the one observed at 119, the general upward trend should remain intact. The next objective will be the late December lows at 121, followed by the previous year's maximum at 122.
Hourly chart
SWFX and OANDA traders bullish; SAXO clients bearish
The bullish sentiment might not be as strong as yesterday, but a significant majority of open positions is nonetheless long, namely 60%. As for the buy orders, their share grew even further compared to the previous report, from 66 to 82%.
In the meantime, the share of bulls at OANDA became higher than in the SWFX market, increasing from 59 to 61%, and SAXO Bank clients seem to have a different opinion regarding USD/JPY. The percentage of long positions at SAXO decreased even further, from 44 to 42%.
Spreads (avg, pip) / Trading volume / Volatility
17% of traders see USD/JPY above 124.5 by mid-May
Compared to the previous week the bullish sentiment gained even more strength, as 66% of all FX Community votes are now bullish. However, the average forecast for the pair for the end of this week went down to 117.9. A third of all traders surveyed expects the price to close Friday above 116.4 and below 117.9.
Dasak2010 is waiting for an upward correction, noting that the pair is bearish on the four-hour chart, whereas Likerty is short the Buck, assuming USD/JPY will dip down in the direction of 114.50.