- The portion of buy orders fell to 54%
- 67% of all open positions are long
- Resistance rests at 100.41
- The weekly S1 at 99.36 represents immediate support
- 59% of the survey participants expect the US Dollar to cost less than 105.00 yen in three months
- Upcoming events: US New Home Sales, US Markit Manufacturing PMI, US Existing Home Sales, US Crude Oil Inventories
Initial jobless claims posted a surprise fall, fresh data revealed on Thursday. According to the Department of Labor, the number of Americans filing for unemployment benefits dropped to 262,000 in the week ended August 13, following the preceding week's reading of 266,000, whereas market analysts pencilled in a slight increase to 269,000 in the reported period. Four weeks ago, claims hit the 43-year low of 248,000 touched in mid-April. Last week's data marked the 76th consecutive week of initial jobless claims below the 300,000 level, the longest streak since 1973. Meanwhile, the four-week moving average, considered a better measure of labour market trends, jumped 2,500 to 265,250 in the week ending August 13. Other data released on Thursday showed an unexpectedly large improvement of business activity in the US mid-Atlantic region. According to the Philadelphia Federal Reserve's survey, the manufacturing activity index rose to 2.0 points in August, after dropping 2.9 in the preceding month, while economic desks anticipated an increase to 1.2 in the reported month.
Furthermore, the survey's six-month outlook indicator grew to 45.8 in August from last month's 33.7, posting the highest reading since January 2015. The survey tracks business activity in eastern Pennsylvania, southern New Jersey, and Delaware. The Philly Fed index is seen as one of the first monthly indicators of the health of the US economy.
Markit Manufacturing PMI and US New Home Sales
One of fundamental events that could have an impact on the USD/JPY pair today is the US Markit Manufacturing PMI. It captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the Manufacturing PMI is an important indicator of business conditions and the overall economic condition in the US. Another event is the New Home Sales, which are an important measure of housing market conditions. House buyers spend money on furnishing and financing their homes, so as a result the demand for goods, services and the employees is stimulated.USD/JPY subject to more weakness
Monday's decline caused the USD/JPY currency pair to almost completely erase the bullish gap. Moreover, the Buck crossed the immediate support yesterday, leaving the door open for a fall below 100.00 level, as today the closest area to limit the losses rests only at 99.36, namely the weekly S1. Technical indicators also suggest the pair is to edge lower, as they retain bearish signals in all timeframes. Ultimately, the Greenback could continue sliding down to around 0.96, where the lower border of the descending channel pattern is located, unless the tough support area around 98.70 triggers a rebound.Daily chart
As was anticipated, the 200-hour SMA caused the US Dollar to weaken against the Japanese Yen, causing the pair to inch closer to the 100.00 mark. The 100.00 psychological level could now provide some support, but taking into account the previous week, a drop lower is quite possible.
Hourly chart
Market sentiment slightly improved over the day, as 67% of all open positions are now long, compared to 65% yesterday. The portion of buy orders, however, lost 1% point, having fallen to 54%.
Sentiment at Saxo Bank is virtually the same - 71% of the Denmark-based clients are currently holding long positions. Traders at OANDA are even more confident in Dollar's appreciation - as many as 72% 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 105.00 yen
Slightly more than half of the surveyed (59%) now assume that the US Dollar is to cost less than 105.00 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 23 and August 23, the mean forecast for November 23 is 103.61. At the same time, 13% of the surveyed believe the Greenback could cost somewhere between 99.00 and 100.50 yen or even more than 109.50 yen in three months.