- 51% of all pending orders are to sell the US Dollar
- 61% of all open positions are long
- The nearest significant resistance is around 110.40
- The 109.22 area brings strong support
- Upcoming events: 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.
US PPI and Core PPI are the only upcoming events
Among upcoming events today it is worth paying attention only to the US PPI. The US PPI 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. However, in Core PPI those volatile products, such as food and energy, are excluded in order to capture an accurate calculation.
USD/JPY in tight range between 109.22 and 110.50
As was anticipated, the US Dollar edged lower against the Japanese Yen yesterday, but managed to remain relatively high above the key support—the monthly S1 at 109.22. Despite the USD/JPY pair showing signs of strength early today, technical studies keep giving strong bearish signals, suggesting the key support could be reached today. In case the Greenback strengthens versus the Yen too much, the six-week down-trend is likely to reverse polarity and reimburse USD-selling. Furthermore, yesterday's breach from the broadening rising wedge pattern is also likely to lead to the pair sliding down towards the pattern's origin point—the same 109.22 mark. The upcoming FOMC meeting on Wednesday still remains the key market mover this week.Hourly chart
The same six-week down-trend is also present on the daily chart, which suggests the USD/JPY pair is likely to undergo another decline soon and retest the monthly S1 at 109.22. However, a breach of this resistance line is also possible, in which case a potential recovery towards 112.00 could be seen, with a much stronger down-trend coming into play slightly higher.
Daily chart
Traders' sentiment remains bullish today, with 61% of all open positions being long and the other 39% - short. Meanwhile, there are 51% of all pending orders set to sell the Greenback.
At the moment, 60% of OANDA clients are long the US Dollar against the Yen, while the remaining 40% are short. In addition, Saxo Bank clients' sentiment slightly worsened over the day, as 62% 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 13 and June 13, traders expect the US Dollar to appreciate to 112.72 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 16% of survey participants choosing each of these trading ranges. Furthermore, the 108.00-109.50 range was the second most popular one, with 14% of the voters choosing it.