- The share of purchase orders went up from 54 to 60%
- 70% of all open positions are long
- Immediate resistance lies at 111.70
- The closest support rests at 110.93
- Upcoming events: Fed Chair Yellen's Speech, US JOLTS Job Openings, Japanese Core Machinery Orders, Japanese PPI
US private companies created less positions than expected last month; however, a fall in the jobless rate suggested that the labour market remained on a strong footing. The Labour Department reported on Friday that nonfarm payrolls rose 98,000 in March, compared to the previous month's downwardly revised gain of 219,000. Meanwhile, analysts expected the economy to add 174,000 new jobs during the reported period. According to economists, nonfarm employments was hit by the weather-related effects of the big storm that hit the Northeast and Midwest.
Meanwhile, the unemployment rate fell to 4.5%, the lowest since May 2007, from 4.7% in February, while analysts anticipated an unchanged reading. In order to keep up with growth in the US working age population, the economy needs to create at least 75,000 jobs each month. Job growth averaged 178,000 per month in the Q1 of 2017, suggesting that an expected 1.0% GDP rise for the Q1 could be temporary. Average hourly earnings advanced 0.2% in March, after climbing 0.3% in the prior month. Back in March, the Fed raised rates for the first time this year and promised two more hikes in 2017. With the economy expected to bounce back in the second quarter, analysts pegged June for the next rate hike.
A relatively quiet Monday
The only significant event today is Fed Chair Yellen's Speech. As the head of the US central bank, her words can have a serious impact on the US Dollar. On Tuesday among US fundamentals only the JOLTS Job Openings are due, but are unlikely to have solid impact on the USD/JPY pair's performance, thus, more focus should be on the Japanese Core Machinery Orders. They are the total value of machinery orders placed at major manufacturers in Japan. They are legally binding contracts between consumers and producers for delivering goods and services. The report is considered the best leading indicator of business capital spending, and increases are indicative of stronger business confidence and, therefore, as larger the number is, the positive it tends to be for the currency, while a negative reading is understood as a drop in growth.USD/JPY stabilises above 111.00
In spite of a poor US NFP reading, the Buck still managed to recover from its intraday low and close trade in the green zone against the Yen on Friday. The recovery reconfirmed the 110.50 level as a tough psychological support, which is likely to keep the USD/JPY pair afloat in case bears take over the market again. The weekly pivot point at 110.93 is now the closest support, but a bearish development is doubtful, even though technical indicators are giving corresponding signals. Meanwhile, a surge beyond 111.70 is also unlikely to occur, being that there are no market movers present and the 20-day SMA and the weekly R1 form relatively strong resistance around that area.Daily chart
On Friday, the USD/JPY pair managed to break out from the four-week down-trend, completely ignoring the 200-hour SMA, which was bolstering the resistance line. However, despite the breach, the exchange rate is unlikely to leave the bullish support line, meaning that another retest this week is expected.
Hourly chart
The Greenback appears to be overbought, as 70% of all open positions are long today, compared to 67% on Friday. At the same time, the share of purchase orders went up from 54 to 60%.
Right now 62% of OANDA clients are bulls, unchanged since Friday, 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 64% of their open positions are now long and the remaining 36% 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 10 and April 10, traders expect the US Dollar to appreciate to 113.28 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 53% of all forecasts fall under 114 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 108.00 and 109.50 yen in three months, with 17% of the survey participants choosing this trading range. At the same time, the second most popular interval was the 115.50-117.00 one, with 13% of survey participants choosing it.