- The relative size of the commands set to purchase the greenback 100 pips from the spot has soared from 47 to 75% since the previous report
- The sentiment stays neutral
- Fingraphs.com: USD/JPY to trade in the 1.23-1.25 region in the next few months
- FXPro: 135 is a viable target
- Upcoming events: US ISM Manufacturing PMI, Construction Spending
The number of Americans filing new applications for unemployment benefits rose more than expected last week, but the underlying trend remained consisted with sustained strength in the jobs market. Initial claims for state jobless aid soared by 17,000 to a seasonally adjusted 298,000 for the week ended December 27, the Labor Department said, following four consecutive weeks of drops. The four-week moving average of claims, considered a better gauge of labour market trends as it strips out weekly volatility, climbed only 250 to 290,750 last week. It has stayed below the 300,000 mark for 16 weeks in a row. The US government is projected to report next week that non-farm payrolls increased 240,000 in December following the November's rise of 321,000, marking the 11th straight month of job gains above 200,000, the longest such stretch since 1994. The unemployment rate is seen dropping to 5.7%, which would be the lowest level since June 2008.
A separate report revealed that the number of contracts to purchase previously owned US homes climbed modestly in November, indicating a still weak housing market despite months of robust economic growth and job creation. The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in November, edged up 0.8% to 104.8. The NAR also revised its October reading to a slightly lower level.
Banking holiday in Japan
Though it is still a baning holiday in Japan, there will be plenty of reasons for the market to be active. The US ISM Manufacturing PMI at 3 pm GMT is going to be the main event for USD/JPY, though European figures to be released before may also contribute to the overall level of volatility.
USD/JPY negates Dec 29 losses
Simon Smith, Chief Economist at FXPro, is expecting the Yen to weaken next year. 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.
Daily chart
Despite absence of any notable supports, today USD/JPY has managed to recover some of the losses made last Monday. If the technical indicators turn out to be right and the bulls keep pushing the price further, the nearest significant resistance the US Dollar is going to encounter is 121, followed by 122 (2014 high). Nevertheless, the currency pair is still considered prone to a decline to the up-trend.
Hourly chart
Buy orders on the rise
Though the sentiment towards USD/JPY is neutral, the distribution between the pending orders is turbulent. The relative size of the commands set to purchase the greenback 100 pips from the spot has soared from 47 to 75% since the previous report, suggesting the current up-move may be accelerated by additional buying in the future.
Meanwhile, a notable discrepancy between the SWFX market, OANDA and SAXO Bank clients' exposure with respect to USD/JPY is still present. The percentage of long positions reported by the data providers is 49, 60 and 79%, respectively.
Spreads (avg, pip) / Trading volume / Volatility
Most forecasts placed above 120
Results of a survey among the FX Community members reveals that an overwhelming majority (83%) of traders who shared their opinion expect USD/JPY to close this week in green. The consensus forecast for Jan 2 is 120.5, but only 16% of respondents voted for the 120.9/2 interval, the same amount of votes as for the 122.2/121.6 range. According to the community, the most likely ranges for USD/JPY to end this week in are 121.6/120.9 and 120.2/119.5 - 18% of participants voted for them.