- The gap between the buy and sell orders narrowed, as 52% of commands are placed to purchase the Greenback
- Market sentiment among SWFX traders improved even more, as 75% of participants are long the Buck
- The Greenback is viewed to cost 122.53 yen in three months
- The nearest resistance rests at 119.20, namely the 100-day SMA, while a cluster of significant levels around 118.30 is likely prevent the pair from declining
- Upcoming events: US FOMC Member Dudley Speech, US ISM Non-Manufacturing PMI, US JOLTS Job Openings
The US unexpectedly surprised with soft employment data, the world's number one economy created fewer jobs than predicted, while the jobless rate remained unchanged, according to the Labor Department. The US economy added 126,000 jobs in March, compared with revised 264,000 new jobs in the previous month. Economists, however, had anticipated a 245,000 gain. The disappointing jobs data comes after twelve consecutive months of the US economy adding over 200,000 jobs a month. However, the jobless rate remained at 5.5% last month, in line with expectations, which is the lowest reading since mid-2008. The number of unemployed Americans was little changed at 8.6 million. In 2014, the US added 3.1 million jobs, or 260,000 jobs per month. Last year was the best year for job growth since 1999.
Earlier in the week, the ADP report on the US labour market also surprised to the downside, as fewer jobs were added in March than predicted. ADP non-farm employment change increased by 189,000 in March, considerably below expectations of a 225,000 rise. However, last month's data was revised upwards to 214,000 from 212,000. Last month, Fed policy makers downgraded their economic outlook. Yet at the same time, also opened up the probability of hiking the benchmark funds rate as early as June.
Jasper Lawler, CMC Market Analyst, expects Japan's economy to start losing momentum. Jasper commented that despite the level of stimulus the Japanese economy had, a decline is right around the corner. He said that "even though we have seen some pick up in the quarters passed, now there is some indication that actually the growth in manufacturing is not as strong as it should be, but is actually looking as if it is moving towards a decline."
David Starkey, Senior Market Analyst from Cambridge Mercantile Group, commenting on the Fed removing 'patience' from Fed's interest rate guidance, said that "Yellen lowered expectation for GDP, inflation, and as such – the trajectory of Fed rates." He noted that "in December the last economic projections were that the Fed rates would be over 1% at the end of 2015." However, the most recent data showed the Fed now only expects rates to go as high as 0.625% by the end of 2015.
Andrew Grantham, senior economist in CIBC World Markets, says that an increase in prices in the United States is unlikely to accelerate, at least on the core level and probably even on the headline level, "given that we have seen some further decline in oil prices since the end of February." According to him, it is improbable that year-view rates of inflation are going to get any stronger in the near-term (next 2-3 months). Still, "in terms of Fed policy, as long as they [headline and core inflation] do not decelerate significantly, they [the Fed officials] could still be looking to hike in June."
ISM Non-Manufacturing PMI
There are no data releases concerning the Japanese economy; however, the Institute for Supply Management is going to publish the US ISM Non-Manufacturing PMI data later today, which is the main event for Monday. The figures are expected to slightly worsen, thus the Greenback is likely to fall against the Yen more.
USD/JPY under 119
The Greenback experienced a sharp decline at the end of the previous week amid the devastating US Non-Farm Employment Change data. All of the nearest supports have been breached, leaving the USD/JPY pair with a 76-pip loss. Moreover, the 119 border was pierced, and the US Dollar settled at 118.91 against the Yen. At the moment the technical indicators are giving bearish signals and suggesting a further slump today, whereas the closest support level now lies around 118.30, represented by the lower Bollinger band and weekly S1.
Daily chart
After several attempts the 119.50 support was finally penetrated. A rather sharp decline weakened the US Dollar against the Yen beyond 119. And even though the pair appears to be regaining bullish momentum, the overall bias remains bearish.
Hourly chart
Three fourths of traders are long
Market sentiment among SWFX traders improved even more, as 75% of participants are long the Buck. However, the gap between the buy and sell orders narrowed, as 52% of commands are placed to purchase the Greenback.
Meanwhile, OANDA traders retain a bullish outlook towards the US Dollar, being that still 63% of positions remain long. SAXO Bank clients, on the other hand, changed their perspective towards the Greenback, as 72% of all positions are now long (compared to 45% previously).
Spreads (avg, pip) / Trading volume / Volatility
The Greenback is viewed to cost 122.53 yen in three months
The majority of the surveyed (52%) expect the Buck to cost more than 123 yen in a three-month period. The most popular choice was divided between two intervals: 123-124.5 and 124.5-126, selected by 16% of participants each. The second popular decision also includes two prices ranges, 121.5-123 and beyond 127.5, both chosen by 13% of traders.