- The share of purchase orders dropped from 57 to 49%
- Bulls take up 73% of the market
- Resistance is around 113.67
- Immediate support is at 113.00, namely weekly PP
- 53% of the survey participants expect the US Dollar to cost less than 117 yen in three months
- Upcoming events: US Jobless Claims, US Revised Non-Farm Productivity, US Markit Services PMI, US ISM Non-Manufacturing PMI, US Factory Orders, US Natural Gas Storage
Another day of positive data, but bad performance from the Greenback's side. . The US Dollar lost the most against the Aussie, which in turn was strengthened by a strong reading of Australian GDP. The AUD/USD surged 1.66% as a result. Another significant loss was registered against the Sterling, namely 0.92%, while the Buck edged 0.70% lower against the Kiwi and 0.46% versus the Yen. The US currency, however, remained relatively unchanged against the Loonie and the Swissie, adding 0.05% and losing 0.06%, respectively. At the same time, the EUR/USD remained completely unchanged over the day.
US private sector created more jobs than expected in February, another sign that the US job market remains resilient despite economic weakness overseas and volatility in financial markets. According to payroll processor ADP, US private companies hired 214,000 workers last month, whereas economists had expected a gain of 190,000 jobs. Private payroll gains in January were revised down to 193,000 from an originally reported 205,000 rise. The ADP data come ahead of the US Labor Department's more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment. Economists are forecasting total non-farm employment to have grown 190,000 in February, while the unemployment rate is predicted to remain unchanged at 4.9%.
In addition to that, the ISM will deliver the potential market-moving indicator for the US when it publishes its non-manufacturing index for February on Thursday. Earlier in the week, the ISM reported that US manufacturing activity continued to shrink in February for the fifth consecutive month. The ISM index of purchasing managers rose to 49.5 last month, compared with 48.2 in January. Even though, the figure represented the highest reading since September 2015, the gauge remained below the key 50-mark threshold, which indicates a contraction in manufacturing that accounts for 12% of the US economy.
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.
US Services PMI and Factory Orders
Today the main events are the Final Services PMI and the ISM Non-Manufacturing PMI. The Final Services PMI is released by Markit Economics captures business conditions in the services sector. As the services sector dominates a large part of total GDP, the services PMI is an important indicator of the overall economic condition in US. The ISM Non-Manufacturing PMI, however, also captures business conditions in the services sector, but is released by the Institute of Supply Management. The Market PMI is expected to remain unchanged, while the ISM one to weaken and, therefore, is expected to weigh on the USD/JPY. Another event to influence the US Dollar's performance are the Factory Orders. The Factory Orders are released by the US Census Bureau and are measure of the total orders of durable and non-durable goods such as shipments (sales), inventories and orders at the manufacturing level which can offer insight into inflation and growth in the manufacturing sector.USD/JPY attempts to erase Wednesday's losses
Strong US fundamental data failed to provide sufficient impetus to breach the 114.00 psychological level, which resulted in the USD/JPY's 50-pip loss yesterday. However, risk-on sentiment appears to be prevailing today, creating a possibility for the pair to negate Wednesday's losses and even establish a new 13-day high. The closest resistance is represented by the 20-day SMA at 113.67, while the second target is located at 115.00, namely the weekly R1 and the monthly PP. Nonetheless, according to the pair's three-week consolidation trend and mixed technical studies, we might observe the Buck decline beyond 113.00 yen—where the weekly PP rests.Daily chart
The US Dollar failed to reach the ascending channel's upper border to confirm the pattern, as momentum dropped back under 114.00 yen. However, a rebound occurred before the retest of the lower border as well, suggesting the pair could be in a consolidation period. In this case, the lower boundary is expected to be reached between 113.40 and 113.80 by the end of the week.
Hourly chart
SWFX sentiment stays bullish
Traders at OANDA and Saxo Bank have a diametrically opposite view of the pair's future. Clients of both brokers are mostly bullish. Canadian-based foreign exchange company reports that 63% of open positions are long, compared to 65% on Wednesday, and the Danish bank reports that 57% of its clients' positions are long, compared to 56% previously.
Spreads (avg, pip) / Trading volume / Volatility
More than a half expect the exchange rate to fall under 117 yen
The majority of the survey participants (53%) expect the US Dollar to cost less than 117.00 yen in three months. The most popular choice, however, is the 120.00-121.50 price intervals, selected by 21% of the voters. According to the votes collected between Feb 03 and March 03, the mean forecast for June 03 is 116.03. At the same time, 16% of the surveyed believe the Greenback could fall in the 111.00-112.50 price interval after a three month period.
This week, traders are expecting pure negative development of the pair, opening short position more often than long ones.
On the bullish side of the barricade, Trendmaster suggests that the "USD/JPY has been benefiting from risk aversion since the beginning of January. This week I am expecting the currency pair to trade within a range or slightly bullish," he mentioned.
Meanwhile, Daytrader21 believes that the Yen could post more gains against the US currency by the end of the week. "The USD/JPY will more likely to be trading below the 115.00 psychological number as the slide in equity market is not over yet, so current risk-off environment should push investor into the safe-haven currency like the Japanese Yen which gained substantially in current environment," he backed his view.