- The portion of buy orders declined from 59 to 55%
- 58% of traders are long the Buck
- Pair approaches down-trend around 104.20
- Solid support at 100.70 (50% FIbo plus 2014 low and weekly S1)
- 56% of the survey participants expect the US Dollar to cost less than 108.00 yen in three months
- Upcoming events on Tuesday: US Unit Labour Costs, Non-Farm Productivity, Japanese Core Machinery Orders, Japanese PPI
The US non-farm sector created more jobs than expected last month, whereas the unemployment rate remained unchanged, fresh data from the Department of Labor showed on Friday. According to the Bureau of Labor Statistics, the US non-farm payrolls (NFP) increased by 255,000 in July, while market analysts expected the sector to add just 181,000 jobs in the reported period. Meanwhile, the preceding month's figure was revised up to 292,000 from the originally reported reading of 287,000. Furthermore, the headline jobless rate came in at 4.9% in July, in line with last month's figure, whereas economic desks pencilled in a slight deceleration to 4.8%. The report also revealed that average hourly earnings rose 0.3% month-over-month on a seasonally adjusted basis in July, following the 0.1% increase registered in June, while economists anticipated the indicator to come in at 0.2% in the reported month.
On a year-over-year basis, average hourly earnings remained steady at 2.6%, meeting analysts' projections. The NFP report provides important insights into the health of the US economy and offers some clues to the path of future rate hikes. Back in 2012, the Federal Reserve set an unemployment target of 6.5%.
Today's data to be mixed
Today from the Dollar's side of the currency pair, non-farm productivity is to show growth of 0.5% after -0.6% in the previous quarter. On the other hand, according to the consensus of the market, unit labour costs are likely to increase significantly less than 4.5% reported three months ago. From the Yen's side of the pair, core machinery orders are expected to grow as much as 3.4% following disappointing -1.4% a month ago. Another Japanese release will be on producer price index, which analysts expect to preserve more or less the same rate of decline: minus 4.0% after minus 4.2% also a month ago.USD/JPY remains on the back foot
The recent rebound from the 50% Fibo keeps suggesting that a short-term recovery towards the current descending channel's resistance line is likely to take place. On the other hand, daily technical indicators imply the USD/JPY currency pair is to sustain a loss today, with the weekly PP at 101.76 acting as the immediate support. In any case, the overall outlook is to remain bearish, as long as the key resistance remains intact, meaning that the current recovery might be short-lived. However, it is uncertain whether bears will be able to push the exchange rate significantly below the support area of 100.70.Daily chart
The exchange rate managed to rise above the long-term moving average, with the target shifting to the two-week down-trend at 102.75. This resistance line could trigger another USD/JPY sell-off, in which case price is likely to return to 100.74.
Hourly chart
Bullish traders' sentiment keeps fading, as 58% of traders are long the Buck (previously 60%). Meanwhile, the portion of buy orders declined from 59 to 55%.
Sentiment at Saxo Bank is virtually the same - 67% of the Denmark-based clients are currently holding long positions. Traders at OANDA are even more confident in Dollar's appreciation - as many as 71% of open positions are long. Using the data as a contrarian indicator, the sentiment implies a cheaper Dollar. There is little room for new buyers to enter the market, and if the bulls start closing positions on profit-taking, this could create a strong selling pressure.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to fall below 108.00 yen
Slightly more than half of the surveyed (56%) now assume that the US Dollar is to cost less than 108.00 yen after a three month time. The most popular choice, however, implies that the Greenback is to cost between 108.00 and 109.50 yen in three months, selected by 18% of the voters. According to the votes collected between July 09 and August 09, the mean forecast for November 09 is 106.08. At the same time, 17% of the surveyed believe the Greenback could cost more than 112.50 yen in three months.