- Еhe portion of buy orders inched down from 61 to 54%
- 51% of traders are long the Buck
- Immediate resistance lies around 117.18
- The closest support rests around 116.89
- Upcoming Events: US Labor Market Conditions Index, US Consumer Credit, Japanese Consumer Confidence, US JOLTS Job Openings
The US economy created less jobs than expected in the last month of 2016, disappointing markets. The US unemployment rate rose in line with analysts' expectations from 4.6% to 4.7%, while the participation rate climbed from 62.6% to 62.7%. The report also showed US nonfarm payrolls advanced 156,000, while markets anticipated a gain of 177,000, following the previous month's increase of 178,000. Official data published by the Bureau of Labor Statistics showed manufacturing employment advanced 17,000 in December, despite small decreases in two previous months. In the meantime, there was also a slight fall in construction jobs and decline of over 15,000 in temporary help-services jobs. Nevertheless, government employment increased 12,000. In the meantime, the BLS said the Average Earnings Index jumped 0.4%, compared to a 0.1% decrease in November, which boosted the annual rate from 2.5% to 2.9%, the strongest gain since June 2009. Despite mixed economic indicators, the data is likely to maintain confidence in the job market and analysts' expectations for the Federal Reserve's rate hikes in 2017.
After the report, the US Dollar strengthened immediately. The EUR/USD pair dropped to 1.0550, while the USD/JPY held steady at 116.50.
Quiet start of the week
The beginning of this weak is going to be rather quiet, with only one event worth paying attention to scheduled today, namely the US Consumer Credit change. It is an amount of money that individuals borrowed. It shows if consumers can afford large expenses, which can fuel economic growth. However, a high figure may also indicate that the economy is overheating, as consumers borrow in order to live beyond their means. There is also a bank holiday in Japan today, but tomorrow the Japanese Consumer Confidence is to be released. It brings some importance, because it captures the level of sentiment that individuals have in economic activity. A high level of consumer confidence stimulates economic expansion, while a low level drives to economic downturn.USD/JPY holds steady above 117.00
The Greenback almost completely managed to erase its previous losses on Friday, successfully climbing over the 117.00 yen mark. The post-NFP rally is likely to persist today, allowing the pair to return to its previous consolidation range, namely the area between 116.50 and 118.50, despite the initial hard downside movement last week. Technical indicators are also giving bullish signals, suggesting the Buck is to outperform the Japanese currency this week. The 20-day SMA at 117.18 is the closest resistance, but the pair is seen edging up as high as 117.70.Daily chart
Once the USD/JPY pair bottomed out at 115.10, it began recovering rather rapidly. The pair appears to be gravitating towards the 200-hour SMA, refusing to stay away from it for too long. However, the movements are becoming increasingly more volatile, suggesting we might soon see a sharper development in either direction.
Hourly chart
Market sentiment remains close to equilibrium, as 51% of traders are long the Buck today (previously 52%). At the same time, the portion of buy orders inched down from 61 to 54%.
Right now 57% of OANDA clients are bears, compared to 51% on Friday. In the meantime, Saxo Bank broke out of the perfect equilibrium, being that 52% of their open positions are now long and the remaining 48% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between December 09 and January 09, traders expect the US Dollar to appreciate to 118.47 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 61% of all forecasts fall above 117 yen, which is close to the current spot price. The majority of people voted expect the US Dollar to cost somewhere either between 121.50 and 123.00 or between 123.00 and 124.50 yen in three months, with 14% of the survey participants each choosing these trading ranges. At the same time, the second most popular intervals were the 111.00-112.50 and the 120.00-121.50 ones, both with 12% of survey participants choosing it.