- The number of buy orders inched down from 55 to 54%
- 59% of traders hold long positions
- Resistance rests around 103.00
- Solid support at 100.70 (50% FIbo plus 2014 low and weekly S1)
- 57% of the survey participants expect the US Dollar to cost less than 108.00 yen in three months
- Upcoming events: US JOLTS Job Openings, US Crude Oil Inventories, US Monthly Budget Statement, US Initial Jobless Claims, US Import Prices, US Mortgage Delinquencies
The US non-farm sector created more jobs than expected last month, whereas the unemployment rate remained unchanged, fresh data from the Department of Labor showed on Friday. According to the Bureau of Labor Statistics, the US non-farm payrolls (NFP) increased by 255,000 in July, while market analysts expected the sector to add just 181,000 jobs in the reported period. Meanwhile, the preceding month's figure was revised up to 292,000 from the originally reported reading of 287,000. Furthermore, the headline jobless rate came in at 4.9% in July, in line with last month's figure, whereas economic desks pencilled in a slight deceleration to 4.8%. The report also revealed that average hourly earnings rose 0.3% month-over-month on a seasonally adjusted basis in July, following the 0.1% increase registered in June, while economists anticipated the indicator to come in at 0.2% in the reported month.
On a year-over-year basis, average hourly earnings remained steady at 2.6%, meeting analysts' projections. The NFP report provides important insights into the health of the US economy and offers some clues to the path of future rate hikes. Back in 2012, the Federal Reserve set an unemployment target of 6.5%.
US Monthly Budget Statement is the only significant event today
There are no truly significant events to influence the USD/JPY pair until Friday, but today attention could still be paid to the US Monthly Budget Statement. It summarizes the financial activities of federal entities, disbursing officers, and Federal Reserve banks. A positive budget statement that receipts exceed budgetary outlays is seen as bullish for the USD. However, according to market expectations, the data is likely to show a deficit, which is to be bearish for the Buck.USD/JPY risks falling back under 101.00
For the second consecutive week the USD/JPY currency pair bounced back from the 102.50 level, unable to surge higher. Even though the Buck found support, represented by the weekly PP, at 101.76 yesterday, technical studies suggest this level is likely to be pierced today. The key support is located around 100.70 mark, namely the 50% Fibo and the weekly S1. In case this area gives in, the pair would then risk falling below the 100.00 mark and possibly even a retest of the falling wedge's lower boundary around 96.00. However, another rebound is eventually expected, which would trigger USD-buying and ultimately lead to an upside breakout from the wedge.Daily chart
The pair was unable to rise above the 200-hour SMA, resulting in a slight sell-off occurring earlier than first anticipated. The 50% Fibo is still the main support, which is expected to cause the rebound and eventually climb over the three-week down-trend.
Hourly chart
Market sentiment remains moderately bullish, as 59% of traders hold long positions. The number of buy orders inched down from 55 to 54%.
Sentiment at Saxo Bank is virtually the same - 62% of the Denmark-based clients are currently holding long positions. Traders at OANDA are even more confident in Dollar's appreciation - as many as 66% 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 108.00 yen
Slightly more than half of the surveyed (57%) now assume that the US Dollar is to cost less than 108.00 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 17% of the voters. According to the votes collected between July 10 and August 10, the mean forecast for November 10 is 105.84. At the same time, 15% of the surveyed believe the Greenback could cost more than 112.50 yen in three months.