- Portion of sell orders plunged from 75 to 55%
- Distribution between the shorts (69%) and longs (31%) stays the same
- Short-term trend-line and 200-hour SMA are at 119.30
- Target is the 2015 low at 115.80
- 58% of the survey participants expect the US Dollar to cost less than 120.00 yen in three months
- Upcoming events: US Unemployment Claims, Non-farm Productivity, Factory Orders
Although yesterday's economic reports were mixed, the US Dollar turned out to be by far the weakest currency among the majors, losing from 1.33% against the Pound to as much as 2.27% against the New Zealand Dollar.
Even though the private sector hiring rose at a slower pace, the US private companies continued to add a robust number of jobs to the economy in January. Employers created 205,000 jobs last month compared with 267,000 in December, according to ADP Research Institute. Economists, however, had predicted a 195,000 advance. The data came ahead of the government's more comprehensive report on Friday. Economists predict that the report will show employers added 200,000 jobs and the jobless rate remained at 5.0%. Robust hiring numbers contrast with weak data on the overall economy, which grew at just a 0.7% annual rate in the final quarter of last year. Economists foresee growth figures will improve in the current quarter. The world's number one economy has been hit hard by a strong US Dollar, weakening global demand and an inventory de-stoking, which have pressured manufacturing and export industries.
A separate report showed business activity in the dominant services sector slowed to the lowest level in almost two years in January, suggesting the economic growth faltered at the start of the first quarter. According to the Institute of Supply Management, the index of non-manufacturing activity dropped to 53.5 last month, the lowest level since February 2014, down from 55.8 in December.
Vatsal Srivastava, director at the Blackwater Consulting, explains why the US Dollar is a advancing against the Yen this week. Even though he says that there was nothing fundamentally driving USD/JPY on Monday, one of the key drivers is the falling oil prices, which is actually boosting the Yen, in his opinion, as there is an addition cause for more QQE. Vatsal Srivastava also mentions that "it is going to be a hard economic ride ahead and there seems to be no light on the horizon for Japan as of now". "Lets hope for the best," he added.
Unemployment claims to stay just below 280K
Today's afternoon is going to be filled with various reports on the US economy. The main event, however, concerns the well-being of the labour market, and, according to the market expectations, there should be around 280K unemployment claims after 278K reported a week ago.USD/JPY en route to 2015 minimum
During the last two days USD/JPY has nearly negated all its gains after Jan 19, as the monthly pivot point was unable to stop Dollar's depreciation yesterday. The currency pair is now testing the next monthly pivot at 117.50, which has a good chance of triggering a rally before another bearish wave. The Buck might rebound up to the weekly S1 at 118.62. Nevertheless, the price should soon slide down to 116 yen, where we are likely to see strong demand because of the last year's low.Daily chart
As expected, the rising support trend-line was broken, while the falling resistance trend-line remained intact. We are therefore bearish on USD/JPY, as there seem to be no significant levels until the very 2015 low, and rallies are to be capped by the 200-hour SMA at 119.30 Yen.
Hourly chart
SWFX sentiment remains strongly bearish
Meanwhile, sentiment among the OANDA and Saxo Bank clients is very much different compared to the situation in the SWFX market. In the first case 69% are holding long positions, up from 67 yesterday. In the second case - 65%, down from the same 67% recorded on Wednesday.
Spreads (avg, pip) / Trading volume / Volatility
More than a half expect the exchange rate to fall under 120 yen
The largest half of the survey participants (58%) expect the US Dollar to cost less than 120.00 yen in three months. The most popular choice is the 114.00-115.50 price interval, selected by 27% of the voters; however, according to the votes collected between Jan 01 and Feb 01, the mean forecast for May 01 is 118.56. At the same time, 15% of the surveyed believe the Greenback could fall in the 120.00-121.50 price interval after a three month period.
Traders are getting more upbeat about the pair, as the proportion of optimists advanced to 75% this week from merely 45% a week earlier. The consensus forecast, however, stands for 120.7. Some of the traders believe the advance could be even more impressive, with Jignesh saying "an unexpected rate cut from the BoJ caught everyone by surprise," and adding that "several market participants who were waiting patiently for good levels to look at short positions, will now be buying dips in this pair" and "upside resistance is at 2015 highs." Meanwhile, almost all the traders think the pair will show new highs.
Likerty is bearish on USD/JPY, saying that "the pair retraced last week up into the Fibonacci 50 percent level from the beginning of December 2015" and "it can push towards the 61.8 level."