- 51% of all pending orders are to sell the US Dollar
- 55% of all open positions are long
- The nearest significant resistance is around 111.20
- The 109.22 area brings strong support
- Upcoming events: Japanese BSI Manufacturing Index, US PPI and Core PPI
The number of Americans filing for unemployment aid dropped less than expected in the week ended June 2. The Labour Department reported on Thursday that initial jobless claims fell 10K to 245K last week, following the preceding week's upwardly revised figure of 255K. Meanwhile, market analysts anticipated a bigger decrease to 241K during the reported week. Nevertheless, claims remained below the 300K level for the 118th consecutive week, the longest streak since 1973. The four-week moving average of claims, considered a better measure of the existing labour market trends, rose 2.25K to 242K during the reported week.
Earlier this week, the Labour Department reported that job openings hit their new high in April, whereas the NFP report released last Friday showed a slowdown in job growth. It may be suggested that employers are facing difficulty of finding suitable workers. Thursday's data also showed that continuous claims dropped 2K to 1.92M in the week ending May 27, whereas their four-week moving average declined 750 to 1.91M, the lowest level since January 1974.
Uneventful beginning of the week
There are no events worth paying attention to today, but tomorrow early morning the Japanese BSI Manufacturing Index is due. It is released by the Ministry of Finance, which studies business authorities' assessments of and forecasts for the economy to seize information for keeping track of economic trends. The BSI is the percentage of firms that say domestic economic conditions are rising compared with the previous quarter, minus the percentage of firms that say domestic economic conditions are declining compared with the previous quarter. Furthermore, the US PPI is also due tomorrow. It measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation
USD/JPY to keep sliding down
The Greenback's attempts to recovery against the Yen are likely to be short-lived, as the recent breach from the triangle pattern on the daily chart suggests so. Furthermore, technical indicators are giving distinctly bearish signals, implying a slide back towards 109.22, namely the monthly S1, is possible. Ahead of this area the USD/JPY currency pair has no other solid demand areas, while a resistance line is in fact present. The US Dollar could easily weaken within the next two days and retest the mentioned demand level, but is expected to receive a strong boost from that point, with the Fed rate hike announcement on Wednesday acting as a catalyst.Hourly chart
No particular changes are seen on the daily chart, with the only exception being that it suggests more room for a limited recovery is present. The Buck is likely to encounter resistance near the 112.00/113.00 area, where the seven-week down-trend rests. .
Daily chart
Traders' sentiment remains bullish today, with 55% of all open positions being long and the other 45% - short. Meanwhile, there are 51% of all pending orders set to sell the Greenback.
At the moment, 62% of OANDA clients are long the US Dollar against the Yen, while the remaining 38% are short. In addition, Saxo Bank clients' sentiment slightly worsened over the day, as 64% of their open positions are now long.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between May 12 and June 12, traders expect the US Dollar to appreciate to 112.60 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 61% of all forecasts fall above 111 yen, which is above the current spot price. The majority of people who voted expect the US Dollar to cost somewhere either between 112.50 and 114.00 or between 115.50-117.00 yen in three months, with 15% of survey participants choosing each of these trading ranges. Furthermore, the 108.00-109.50 range was the second most popular one, with 13% of the voters choosing it.