- The share of purchase orders went up from 34 to 54%
- Traders' sentiment remains bullish at 67%
- Immediate resistance lies at 111.23
- The closest support rests at 110.27
- Upcoming events: US Average Hourly Earnings, US Non-Farm Employment Change, US Unemployment Rate
The number of Americans filing for unemployment benefits decreased more than expected last week, hitting the lowest level over the past five weeks, official figures revealed on Thursday. The US Department of Labour reported initial jobless claims fell 25,000 to a total of 234,000 in the week ended April 1, down from the preceding week's upwardly revised reading of 259,000. This was the biggest weekly decline since April 2015. Meanwhile, market analysts expected unemployment claims to plunge only 251,000 during the reported week. The number of job-seeking persons decreased from 2,052,000 to 2,028,000, thus, affecting the moving average, which hit its lowest level since June 2000.
At the same time, the seasonally adjusted insured unemployment rate of 1.5% remained unchanged from last week. In general, the fact that jobless claims have been fluctuating around 260,000 for more than two years, indicating that the US has a healthy labour market. In addition, the largest spike in unemployment claims was recorded in New York, Texas, Massachusetts, Pennsylvania and California, while the largest drop in unemployment happened in Ohio, Kansas, Missouri, Illinois and Kentucky..
US NFP is the main event today
On Friday most focus will be on the US Non-Farm Employment Change data, which presents the number of new jobs created during the previous month in all no-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 these reviews also rend to trigger volatility in the forex board. Generally speaking, a high reading is seen as positive for the USD, while a low reading is seen as negative, 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 second most important reading today will be the US Unemployment Rate. 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 cannot determine the market's move, as it depends on the headline reading, the Non-farm Payrolls. Finally, the US Average Hourly Earnings, they are a significant indicator of labor cost inflation and of the tightness of labor markets. The Federal Reserve Board pays close attention to this reading when setting interest rates. A high reading is also positive for the USD.USD/JPY in limbo ahead of US NFP
There has been barely any movement registered in the USD/JPY currency pair for the third day in a row yesterday, with the 110.50 mark still proving to be a tough psychological support. Today's NFP data is a double-edged sword, as from one hand the psychological support suggests the Greenback could continue avoiding further losses, while on the other technical indicators imply the given pair could fall under 110.00. Such a decline would even pave the way towards the descending channel's support line at 109.26 to be put to the test, which is also bolstered by the monthly S1, the weekly S2 and the lower Bollinger band. We expected the US Dollar to decline today.Daily chart
On the hourly chart the down-trend received a strong confirmations today and yesterday, with the 200-hour SMA contributing to the supply area. However, the exchange rate bounced back from the lower trend-line, allowing the USD/JPY to maintain trade within the triangle's borders. Technically, the pattern should break to the downside.
Hourly chart
Traders' sentiment remains bullish at 67%, but the share of purchase orders is significantly higher, up from 34 to 54%.
Right now 62% of OANDA clients are bulls, unchanged since Thursday, the bullish sentiment has been holding around the same level for some time now. In the meantime, Saxo Bank clients retain a positive outlook towards the US Dollar, being that 60% of their open positions are now long and the remaining 40% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between March 07 and April 07, traders expect the US Dollar to appreciate to 113.73 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 52% 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 either between 115.50 and 117.00 or between 117.00 and 118.50 yen in three months, with 13% of the survey participants choosing each of these trading ranges. At the same time, the second most popular intervals were the 106.50-108.00, the 108.00-109.50 and the 112.50-114.00 ones, with 11% of survey participants choosing each of them.