- The share of purchase orders dropped to 56%
- Traders' sentiment remains bullish at 53%
- Immediate resistance lies at 113.32
- The closest support rests circa 112.20
- Upcoming events: US Initial Jobless Claims, US Nonfarm Productivity, US Unit Labor Costs
US private companies created far more jobs than expected in January, data published on Wednesday showed. The ADP National Employment Report, a jobs survey released two days before the official Bureau of Labor Statistics government report, revealed that the US private sector saw an increase of 246,000 jobs last month, surpassing markedly analysts' expectations for 165,000. Meanwhile, the December figure of 153,000 was revised slightly down to 151,000. Analysts widely expect the NFP report to show on Friday a 170,000 jobs gain for January, while the unemployment rate is forecast to remain unchanged at 4.7%.
Separately, the Institute of Supply Management reported its Purchasing Managers' Index advanced to 56.0 in January, up from the preceding month's reading of 54.5 and surpassing analysts' expectations for 55.0 points. Any reading above the 50 point level indicates expansion in the manufacturing sector. Furthermore, the New Orders Index and Employment Index advanced to 60.4 and 56.1 in the reported month, respectively. Meanwhile, the Price Paid Index rose to 69.0 for the eleventh consecutive month in January, compared with 65.5 previously. The number slightly topped economists' forecasts for an increase to 66.0.
Less important US fundamentals due today
Thursday does not bring very important economic data releases, but they are likely to have some impact at least. First of all the Initial Jobless Claims, as they are a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labor market. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy. Second, the Non-farm Productivity. It shows the output per hour of labor worked. Non-farm Productivity indicates the overall business health in the US, which has an influence on GDP. As for the Labor Costs, they show the change in the price that business pay for the labor, with exception of the farming industry. It is a leading indicator of consumer inflation, but is unlikely to have a significant impact on the markets.USD/JPY remains on the back foot
The USD/JPY currency pair behaved in accordance with expectations yesterday, having bounced back from the 112.60 psychological support level. However, the pair was unable to retain its positions above the weekly S1, with trade closing at 113.26. Today technical indicators suggest the US Dollar is to edge lower, but the 112.60 mark is still expected to remain intact. A breach, however, would only spark more bearish momentum in the medium term, with the 110.00 mark becoming the next main target. Any positive developments are likely to be capped around 114.50, where the weekly and the monthly PPs, as well as the 20 and the 55-day SMAs are located at.Daily chart
The resistance cluster around 113.90 prevented the USD/JPY pair from edging higher yesterday, also causing the Buck to reverse polarity. The Greenback's bearish momentum returned afterwards, with the exchange rate beginning to make its way towards the 112.60/50 psychological support, where losses are expected to be limited.
Hourly chart
Traders' sentiment remains bullish at 53%, but the share of purchase orders is slightly lower, namely at 56%, compared to 59% yesterday.
Right now 52% of OANDA clients are bulls, compared to 46% on Wednesday. In the meantime, Saxo Bank clients remain on the bullish side, being that 56% of their open positions are now long and the remaining 44% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between January 02 and February 02, traders expect the US Dollar to appreciate to 116.51 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 50% of all forecasts fall above 117 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 120.00 and 121.50 yen in three months, with 15% of the survey participants choosing this trading ranges. At the same time, the second most popular intervals were the 106.50-108.00 and the 111.00-112.50 ones, with 10% of survey participants choosing each of them.