- 51% of all pending orders are to buy the US Dollar
- 62% of all open positions are long
- The nearest resistance significant resistance is near 110.40
- The 109.80 area brings strong support
- Upcoming events: US Final Wholesale Inventories, Japanese Core Machinery Orders, Japanese PPI, US Federal Budget Balance
The number of Americans filing for unemployment aid dropped less than expected in the week ended June 2. The Labour Department reported on Thursday that initial jobless claims fell 10K to 245K last week, following the preceding week's upwardly revised figure of 255K. Meanwhile, market analysts anticipated a bigger decrease to 241K during the reported week. Nevertheless, claims remained below the 300K level for the 118th consecutive week, the longest streak since 1973. The four-week moving average of claims, considered a better measure of the existing labour market trends, rose 2.25K to 242K during the reported week.
Earlier this week, the Labour Department reported that job openings hit their new high in April, whereas the NFP report released last Friday showed a slowdown in job growth. It may be suggested that employers are facing difficulty of finding suitable workers. Thursday's data also showed that continuous claims dropped 2K to 1.92M in the week ending May 27, whereas their four-week moving average declined 750 to 1.91M, the lowest level since January 1974.
Uneventful end of the week
Friday is a very quiet day, with no important events to influence the USD/JPY pair's performance due. Among the upcoming events traders can focus on the Japanese Core Machinery orders. They are the total value of machinery orders places at major manufacturers in Japan. They are legally binding contracts between consumers and producers for delivering goods and services. The report is considered the best leading indicator of business capital spending and increases are indicative of stronger business confidence, therefore, as larger the number is, the positive it tends to be for the currency. Also, the US Federal Budget Balance is due on Monday, which 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.
USD/JPY to slide back to 110.00
The USD/JPY currency pair confirmed the ascending channel pattern with its recovery from the 109.40 area, with the exchange rate now continuing to test the upper boundary. The trend-line is now also coinciding with the 200-hour SMA, which altogether should cause the Buck to slightly weaken against the Yen, allowing the pair to slide back to 110.00, thus, retesting the pattern's support line. Technical indicators in all timeframes support this possibility, but before this scenario plays out temporary volatility breaches to the upside could occur, due to yesterday's excessive USD-buying. The majority, namely 62%, are still buying the Greenback, although it is still far from being overbought, which could mean bad news for the channel, as upside breakout risks emerge.Hourly chart
On the daily chart the USD/JPY breached the triangle pattern to the downside, but appears to have managed to regain the bullish momentum after retesting the monthly S1 at 109.22. With the rate hike in focus next week, the Buck has the opportunity to recover most of May's losses and build solid ground at least above 111.00 ahead of the Wednesday's FOMC meeting.
Daily chart
Traders' sentiment turned bullish today, with 62% of all open positions now being long and the other 38% - short. Meanwhile, there are 51% of all pending orders set to sell the Greenback.
At the moment, 63% of OANDA clients are long the US Dollar against the Yen, while the remaining 37% are short. In addition, Saxo Bank clients' sentiment slightly worsened over the day, as 60% of their open positions are now long.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between May 09 and June 09, traders expect the US Dollar to appreciate to 112.56 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 65% of all forecasts fall above 111 yen, which is above the current spot price. The majority of people who voted expect the US Dollar to cost somewhere either between 112.50 and 114.00 or between 115.50-117.00 yen in three months, with 16% of survey participants choosing each of these trading ranges. Furthermore, the 105.00-106.50, the 109.50-111.00 and the 114.00-115.50 ranges were the second most popular ones, all with 11% of the voters choosing them.