- The number of buy orders remains bullish at 69%
- The bullish side of the SWFX marketplace has gained two percentage points during the last 24 hours, and it is now at 61%
- 21% of traders see USD/JPY above 124.5 by mid-May
- Upcoming events: US Markit Manufacturing PMI, JPY Monetary Policy Meeting Minutes on Feb 22
The number of Americans who applied for unemployment benefits in the week ended February 13 fell more than expected, fresh evidence the US labour market is improving. Initial claims for unemployment benefits decreased by 21,000 to a seasonally adjusted 283,000, the Labor Department said on Thursday, while the prior week's data remained unrevised. Economists, however, had expected a decline to 293,000. Continuing claims for the week ended January 31 stood at 2.425 million up from 2.367 million in the preceding week.
The four-week moving average of claims, considered a better measure of labour market trends as it strips out weekly volatility, declined 6,500 to 283,250 last week. The indicator dropped 14% in the past year to 289,750, which is a very low historical level. The economy has added more than a million jobs over the past three months, a performance last seen in 1997. The number of job seekers for every open position, a key measure of labour market slack, fell to its lowest level since 2007 in December. Solid improvement in the US labour market may prompt the Fed to consider raising interest rates as early as June. However, the latest FOMC meeting minutes showed the central bank was not in a hurry due to concerns over low inflation and slowing global economic growth.
Alasdair Cavalla, CEBR economist, thinks that "the Fed is correct not to rush into raising interest rates. Ultimately, there is no reason to raise interest rate until there is evidence of sustained pick-up in inflation and neither from wage growth in the US, which is maybe starting to pick-up, but isn't fully at the moment, nor from the commodity prices – it's enough evidence to point to a quick tightening in monetary policy".Few fundamentals
Today we are expecting US Markit Manufacturing PMI, while on Sunday and Monday - JPY Monetary Policy Meeting Minutes, as well as some US data on the retail sector.
USD/JPY keeps gaining ground
Alasdair Cavalla, CEBR economist, said: "The Fed is in data-dependent mode, just responding to the data as it comes. Since last meeting there was a very good jobs report out, with a large job creation figure and improvements in both, wage growth and participation rate, so that should help its view that the economy is broadly on track as they are expecting, but it depends on what comes out in the next few weeks between now and then."
Despite Thursday's mixed signals the USD/JPY cross managed to regain some momentum after a decline a day before. The technical indicators proved to be a reliable source for the pair's movement predictions, which are giving bullish signs again today. Hence, the pair is likely to continue rising today, while the closest resistance remains around the weekly PP at 119.18.
Daily chart
On the hourly chart, the USD/JPY has been trading in a tight range. The upper border is represented by the 20- and 55-hour SMAs, while the support level consists of the Yesterday's low at 118.56. Moreover, technical indicators are showing neutral signs, so the Greenback's tide might turn either way at the end of the day.
Hourly chart
Sentiment maintains bullish momentum
The bullish side of the SWFX marketplace has gained two percentage points during the last 24 hours, and it is now at 61%. Although not as high as yesterday, but the number of buy orders remains bullish at 69%.
OANDA traders are also optimistic with respect to the Buck, since 62% of open positions are long, slightly higher than in the previous report. Meanwhile, the attitude of the SAXO Bank traders slid to a rather neutral sentiment, with 51% of open positions being short and the remaining 49% being long.
Spreads (avg, pip) / Trading volume / Volatility
21% of traders see USD/JPY above 124.5 by mid-May
Compared to the previous week the bullish sentiment gained some more ground, as 70% of all FX Community votes are now bullish. As US has had strong data releases, its economy has been growing; this pattern is likely to continue.
aslamhammad is waiting for an upward correction, noting that if the pair manages to stay above the 118.29 monthly PP, then price can still go higher. Whereas, rokasltu thinks the Buck is likely to fall, as the pair retreated from above 120 levels last week.