- 67% of all pending orders are to purchase the Greenback
- 55% of traders hold long positions
- Immediate resistance lies around 114.70
- The closest support rests around 114.36
- Upcoming events: US Initial Jobless Claims, US Import Price Index
The US private sector created more than expected jobs last month, surprising markets. The ADP National Employment Report released on Wednesday showed companies added 298,000 new jobs to the economy in February, while analysts expected a gain of 184,000 jobs. The report also showed that January's initially reported gain of 246,000 jobs was revised up to 261,000. Wednesday's stronger-than-expected ADP figures provided support to the US Dollar on hopes that Friday's NFP would surprise on the upside. After the release, the EUR/USD pair fell to 102.00, while the US Dollar Index advanced to 101.80. Markets expect Friday's NFP data to show a rise of 185,000 for February, compared to the preceding month's gain of 227,000. If the actual data comes in higher than economists' estimates, it would provide additional support for Fed officials to raise rates at their meeting next week.
According to market consensus, the unemployment rate slowed down to 4.7% in February from the previous month's 4.8%. Other data release on Wednesday showed US crude oil inventories rose 8.2 million in the week ended March 3, compared to the prior week's gain of 1.5 million barrels, while market analysts anticipated a climb of 1.1 million barrels during the reported week.
US Initial Jobless Claims and Import Price Index
Thursday is usually a day when markets take a breath. Today is not an exception. Among important data only two events are worth paying attention to. First of all, the US Initial Jobless Claims, which 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. Another event will be the Import Price Index. It informs the changes in the price of imported products into the US. The higher the cost of imported goods, the stronger the effect they will have on inflation, redunding in a higher probability of a rate rise.USD/JPY retests channel's resistance line
A positive reading of the US ADP Non-Farm Employment Change provided the US Dollar with a boost yesterday, allowing it to put the tough resistance around 114.60 to the test. Ultimately, the Buck closed with a 40-pip rally against the Yen, meaning that the ascending channel's resistance line remains intact. From the technical perspective the US Dollar should now undergo a bearish correction, with traders taking profit of the recent rallies; however, technical indicators suggest otherwise. Due to lack of strong market movers today, another positive development is possible, but with gains limited circa 114.75. The base case scenario is still the integrity of the channel's resistance line.Daily chart
The down-trend was pit to the test again yesterday, but a spark of bullish momentum caused a breach today. On the daily chart this could just be intraday volatility, but on the hourly one it would imply the end of the bearish trend. This means that bulls can now take over, also implying that the ascending channel on the daily chart is to be breached to the upside.
Hourly chart
Today 55% of traders hold long positions (previously 60%), while 67% of all pending orders are to purchase the Greenback (up from 57%).
Right now 54% of OANDA clients are bulls, compared to 52% on Wednesday. In the meantime, Saxo Bank clients retain a positive outlook towards the US Dollar, 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 February 09 and March 09, traders expect the US Dollar to appreciate to 114.50 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 62% 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 18% of the survey participants choosing this trading range. At the same time, the second most popular intervals were the 106.50-108.00 and the 118.50 and 120.00, with 15% of survey participants choosing each of them.