- No visible difference between the buy (52%) and sell orders (48%)
- Two thirds of positions are long
- Weekly PP at 103.20 is a potential target
- Strong support is at 100.70
- 52% of the survey participants expect the US Dollar to cost less than 108.00 yen in three months
- Upcoming events: US Unemployment Claims, Factory Orders
US private companies added more jobs than expected in July, the ADP report revealed on Wednesday. Private sector firms in the United States created 179,000 new job places in the reported month, slightly up from the previous month's upwardly revised reading of 176,000, whereas economic desks anticipated a meagre decrease to 170,000 in the seventh month of the year. Business services contributed 59,000 new jobs in July, whereas financial services firm added 11,000 new jobs in the same month. Furthermore, the trade, transportation, and utilities industry added 29,000 new employees to the US labour market, while manufacturers created 4,000 new jobs in July. In the meantime, the construction sector subtracted 6,000 jobs in the reported month. Other data released on Tuesday showed that activity in the US non-manufacturing sector dropped in July, as the ISM Non-Manufacturing Index fell 55.5 points, after rising to 56.5 in June, its 8-month high.
Market analysts expected the indicator to come in at 56.1 in July. The EIA weekly report revealed that US crude oil inventories by 1.4 million barrels in the week ended July 29, after rising by 1.7 million barrels in the previous seven days. Analysts pencilled in a drop of 1. Million barrels in the reported period.
Factory orders decline to speed up
Both the US unemployment claims and factory orders are important events, but today's spotlight is reserved for the events in the United Kingdom. Still, considering that these releases are to come out one and two hours later respectively, there is a chance the market will be able to refocus its attention. According to the consensus, the number of claims for unemployment benefits is to stay the same - 265K after 266K reported a week ago. Contraction in the total value of orders placed with manufacturers, however, is expected to accelerate from 1.0 to 1.8%USD/JPY rises from 100.70
So far support at 100.70, represented by the 2014 low and 50% retracement of the 2012-2015 up-move, is able to hold off the bearish pressure. Demand in this region is also reinforced by a psychological level of 100 yen, below which we may expect interventions from the BOJ. Accordingly, the rate is well-positioned to return to the monthly PP at 103.20. Nevertheless, prolonged recovery is unlikely because of the bearish monthly indicators and a strong trend-line at 105, where resistance is strengthened by the 55-day SMA.Daily chart
In the lower time frame 100.70 is confirmed to be solid support. However, it is worth noticing that every bullish rejection here is rather timid, and the rallies hardly exceed 50 pips. This implies that demand is not as strong as initially expected, and continuous pressure may push the price through this level.
Hourly chart
SWFX sentiment further decreases the chance of solid gains from 100.70, being that the US Dollar is overbought: two thirds of positions are long. At the same time, there is no visible difference between the buy (52%) and sell orders (48%).
OANDA and Saxo Bank traders seem to share the same opinion regarding USD/JPY. At the moment, 70% of OANDA clients are long the Greenback, and only slightly less, 65%, of Saxo Bank traders also expect Dollar's appreciation.
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 (52%) 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 19% of the voters. According to the votes collected between July 01 and August 01, the mean forecast for November 01 is 106.46. At the same time, 18% of the surveyed believe the Greenback could cost more than 112.50 yen in three months.