- The number of buy orders rose from 55 to 56%
- 60% of traders are long the US Dollar
- Immediate resistance lies around 114.60
- The closest support rests around 113.30
- Upcoming events: US Markit and ISM Manufacturing PMIs, Fed Chair Yellen's Speech
The number of Americans filing for unemployment benefits fell markedly last week, official figures revealed on Thursday. The US Department of Labor reported initial jobless claims dropped to 223,000 during the week ended February 24, the lowest level since March 1973, following the preceding week's downwardly revised 242,000 filings. Meanwhile, market analysts anticipated a slight increase to 243,000 in the reported week. That marked the 104th week of claims below the 300,000 level, the longest streak since 1973. Analysts suggest that the US labour markets are at or close to full employment. The four-week moving average of claims, which is considered a better measure of labour market trends, declined 6,250 to 234,250 last week, the lowest since April 1973. Data also showed the number of continuing jobless claims rose 3,000 to 3.07 million in the week ending February 18, while their four-week moving average climbed 750 to 2.07 million.
The strong labour market performance combined with solid inflation growth are expected to give the Federal Reserve more evidence to support a rate hike at its next policy meeting. Back in the Q4, the US economy expanded at a 1.9% annualized pace and is expected to grow 1.8% in the first quarter of 2017. After the release, the US Dollar Index hit its seven-week high.
Fed Chair Yellen's Speech and Services PMI due later today
Friday is also a relatively quiet day, as attention turns firstly to the US Services PMI. It is divided into two separate data release, one by Markit and the other one by the Institute for Supply Management. The Services PMI captures business conditions in the services sector. As the services sector dominates a large part of total GDP, the Services PMI is an important indicator of the overall economic condition in the US. However, today's Fed Yellen's speech is still likely to have the most impact and the most important event to day attention to.USD/JPY tests key resistance
March rate hike expectations continued to bolster the American Dollar yesterday, allowing it to approach the key resistance around 114.60 area. From the technical perspective the USD/JPY currency pair should now make a U-turn and continue to consolidate between 111.75 and 114.75. Technical indicators somewhat confirm this, as they keep giving mixed signals, suggesting the pair is to keep consolidating. On the other hand, the recent Dollar– buying boom could cause the immediate resistance area to get breached, which would open the door for a future retest of the bearish trend-line just above 117.00.Daily chart
The USD/JPY pair's attempt to correct appears to have been short-lived, as the pair refused to drop back under 114.00. As a result, the pair could now be stuck in a tighter consolidation range, different from the one described in the daily outlook. The 23.60% Fibo at 114.01 represents the lower boundary, while the upper one remains the same – the resistance cluster around 114.60.
Hourly chart
Today 60% of traders are long the US Dollar, compared to 62% previously. At the same time, the number of buy orders barely changed, having risen from 55 to 56%.
Right now 54% of OANDA clients are bulls, compared to 57% on Wednesday. In the meantime, Saxo Bank clients barely remain on the bullish side, being that 55% of their open positions are now long and the remaining 45% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between February 03 and March 03, traders expect the US Dollar to appreciate to 114.51 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 56% of all forecasts fall above 114 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 114.00 and 115.50 yen in three months, with 20% of the survey participants choosing this trading range. At the same time, the second most popular interval was the 106.50-108.00, both with 15% of survey participants choosing them.