- 72% of all pending orders are to sell the US Dollar
- 53% of all open positions are short
- The nearest resistance significant resistance is at 111.80
- The trend-line at 110.30 is a potential support
- Upcoming events: US Services PMI, US Factory Orders, US Labor Market Conditions Index, US Non-Farm Productivity
US companies created less new positions than expected last month, whereas the jobless rate dropped unexpectedly. The US Department of Labour reported on Friday that the US private sector added 138K new jobs to the economy in May, following the preceding month's downwardly revised reading of 174K and falling behind expectations for a 181K gain, while the ADP Report showed Thursday that private payrolls rose 253K in May.
Meanwhile, the unemployment rate dropped unexpectedly to 4.3% during the same month, while analysts expected the rate to remain unchanged at 4.4% last month. The jobless rate fall was mainly driven by the nation's drop in the labour force participation rate to 62.7%, the lowest since May 2001. Apart from that, average hourly earnings climbed 0.2% in May, in line with analysts' forecasts. In the meantime, April's increase of 0.3% was revised down to a 0.2% gain. Despite Friday's weak figures, the odds for a rate hike in June remained high at 93.5%. However, some analysts suggested that if inflation growth remains unstable it would be hard for the Federal Reserve to continue raising rates.
US Services PMI is the most important event today
Monday is not rich in terms of fundamental data, but some important events are still due, such as the US Non-Farm Productivity. It shows the output per hour of labor worked and indicates the overall business health in the US, which has an influence on the GDP. However, this release is likely to be overshadowed by the US Services PMI, which is released by both the Markit Economics and the Institute for Supply Management. Services PMI captures business conditions in the services sector. As the services sector dominates a large part of total GDP, the given PMI is an important indicator of the overall economic condition in the US. Finally, the Factory Orders. They are a measure of the total orders of durable and non-durable goods, such as shipments, inventories and orders at the manufacturing level, which can offer insight into inflation and growth in the manufacturing sector.
USD/JPY struggles to rebound
The Buck's attempts to appreciate against the Yen at the end of the previous week were in vain, as downbeat US NFP data caused the given pair to erase all of that week's gains. Nevertheless, the Greenback appears to be reluctant to fall under the 110.50 mark, as it remained above this handle ever since it was retaken back in April. Technical indicators, on the other hand, suggest the USD/JPY is to continue slumping, but that might not be the case due to the breach of the three-week down-trend. Furthermore, the US Dollar is also supported by another trend-line circa 110.30, which should limit the possible losses and provide sufficient impetus for a future recovery.Hourly chart
On the daily chart the USD/JPY pair has an additional support just above the 110.00 mark, which could help the given pair to regain the bullish momentum. Assuming the resistance at 111.80 fails to contain the recovery, the Buck could then easily reclaim the 113.00 major level and retest the bearish trend-line.
Daily chart
Traders' sentiment remains bearish, with 53% of all open positions now being short. Meanwhile, there are nearly three quarters (72%) of all pending orders set to sell the Greenback.
At the moment, 61% of OANDA clients are long the US Dollar against the Yen, while the remaining 39% are short. In addition, Saxo Bank clients' sentiment slightly improved over the weekend, as 62% of their open positions are now long.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between May 05 and June 05, traders expect the US Dollar to appreciate to 112.38 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 63% of all forecasts fall above 111 yen, which is above the current spot price. The majority of people who voted expect the US Dollar to cost somewhere between 112.50 and 114.00 in three months, with 19% of survey participants choosing this trading range. Furthermore, the 115.50-117.00 range was the second most popular one, with 16% of the voters choosing it.