- The number of sell orders increased from 36 to 53%
- 58% of all open positions are long
- The nearest resistance is located around 103.75
- The closest support rests at 102.84
- Upcoming events: US Initial Jobless Claims, US Average Hourly Earnings, US Non-Farm Employment Change, US Unemployment Rate, FOMC Members Fischer, Mester, George and Brainard Speeches
US private companies increased their job creation less than expected last month, official data revealed on Wednesday. According to the ADP National Employment Report, non-farm private employment rose 154,000 on a seasonally adjusted basis in September, compared to the preceding month's downwardly revised figure of 175,000, while market analysts expected a slighter drop to 166,000 during the reported period. The ADP report comes out every month two days ahead of the NFP report, which is expected to announce 171,000 new jobs for September, following the previous month's 151,000. Meanwhile, ISM's Manufacturing PMI came in at 57.1, in September, after touching its lowest level of 51.4 points in August, while markets expect the Index to rise to 53.1.
Furthermore, factory orders for US goods jumped 0.2%, surpassing the 0.4% fall forecast. The services sector accounts for approximately 80% of the US economy. In the meantime, the EIA data released on Wednesday showed US crude oil inventories dropped 3.0 million barrels last week, declining for the fifth consecutive week. Analysts anticipated a buildup of 1.1 million barrels in the week ending September 30, after the previous week's 1.9 million-barrel fall.
US Initial Jobless Claims is the only driver today
There is only one relevant event to influence the GBP/USD pair today, namely the US Initial Jobless Claims. It is 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. However, on Friday attention should be paid to the US Nonfarm Payrolls. They present the number of new jobs created during the previous month, in all non-agricultural business. The monthly changes in payrolls can be extremely volatile, due to its high relation with economic policy decisions made by the Central Bank. The number is also subject to strong reviews in the upcoming months, and those reviews also tend to trigger volatility in the forex board. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish), although previous months reviews and the unemployment rate are as relevant as the headline figure, and therefore market's reaction depends on how the market assets them all. The Unemployment Rate also plays a huge role. It is a percentage that surges from dividing the number of unemployed workers by the total civilian labor force. It represents the percentage of people actively seeking employment and willing to work. Usually, as a higher rate is seen in recessionary economies, while on the contrary, a growing economy sees its unemployment rate decreasing. Therefore, a decrease of the figure is seen as positive for the USD, while an increase is seen as negative, although by itself, the number can't determine the markets move as it depends on the headline reading, namely the Nonfarm Payrolls.USD/JPY to undergo a correction
Despite poor ADP data on Wednesday, the US Dollar still managed to outperform the Japanese Yen, with the immediate resistance cluster limiting the gains. However, the USD/JPY pair is now likely to weaken, amid the supply area around 103.75 being too difficult to breach. Moreover, there is no impetus present today, which would be sufficient for a surge beyond the nearest resistance, thus, a slight downside correction is the most probably outcome. A drop back under 103.00 is also doubtful, but in case bears do trigger such a sharp decline, the weekly R2 at 102.84 is to limit the losses. Meanwhile, technical studies are unable to confirm the outlook, as they are giving mixed signals.Daily chart
The USD/JPY currency pair continues to climb higher since the breach of the nine-month down-trend. The main target right now is the 104.33 level, namely August 2016 high, which is expected to cause the Buck to make a U-turn, with the NFP data being the catalyst.
Hourly chart
Today 58% of all open positions are long, compared to 60% on Wednesday. The number of sell orders increased from 36 to 53%.
Meanwhile, there has been an increase in the number of long positions at other brokers. Right now 57% of OANDA clients are bulls, unchanged since Wednesday. Saxo Bank clients, however, slightly less bullish than on Wednesday, being that the portion of longs now takes up 56% of the market.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between September 06 and October 06, traders expect the US Dollar to depreciate to 104.22 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 70% of all forecasts fall above 102 yen, which is close to the current spot price. By far the most popular interval is 102.00-103.50, chosen by 16% of all the surveyed, compared to popularity of the 105.00-106.50, 106.50-108.00, 108.00-109.50 and 109.50-111.00 intervals.