- The percentage of commands to acquire the Greenback lost two percentage points to 69%
- Bulls stopped gaining advantage over bears, as 60% (previously 61%) of traders are optimistic about the US Dollar's prospects
- 21% of traders see USD/JPY above 124.5 by June
- The nearest resistance is represented by the weekly R1 at 120.06, while the closest support is now the weekly PP at 119.34
- Upcoming events: US Unemployment Claims, US Revised Non-Farm Productivity, US Factory Orders, FOMC Member Williams Speech
US private employers added more than 200,000 workers to payrolls in February for the 13th consecutive month, in a latest sign that strong hiring should underpin the world's number one economy this year. According to the payroll processor ADP, US companies created 212,000 jobs last month, recording a solid gain, but missing expectations for a 219,000 new jobs and following 250,000 jobs in January. Tomorrow's non-farm payroll report is predicted to show 235,000 people were added to the country's workforce last month, a slight decline compared to January's numbers, while the jobless rate should fall further to 5.6%. Solid job gains are encouraging as strengthening labour market suggests that the Fed may decide to increase interest rates sooner than expected. The US labour market coupled with inflation are key determinants when it comes to the debate about the timing of the monetary policy normalization.
A separate report showed US services sector expanded in February, with ISM's non-manufacturing PMI rising slightly to 56.9 last month from 56.7 in January. At the same time Markit reported the fastest pace of activity growth in the US services sector in February, as customers benefited from improved economic conditions and falling crude prices. Markit's services PMI jumped to 57.1 in February, up from 54.2 in the preceding month, marking the 16th month in a row in expansion.
Andrew Wilkinson, Chief Market Analyst at Interactive Brokers, said that "the Japanese economy probably requires further stimulus from Bank of Japan", adding that the question "whether or not massive quantitative easing at the BoJ is actually working for the domestic economy" remains topical.Unemployment Claims along with Factory Orders are likely to boost demand for the Buck
Today the US Unemployment Claims, along with the Factory Orders, are expected to show stronger figures and thus stimulate the Greenback's growth. However, the Revised Non-Farm Productivity is likely to weaken, while the William's speech might also negatively impact the Dollar.
USD/JPY: correction to take place
According to Andrew Wilkinson, there are signs that "the market is getting back into that mode of expecting further stimulus." As a result, it is reasonable to "expect the Yen to continue weakening into 120s."
On Wednesday the USD/JPY pair continued to trade between the weekly PP an R1 levels. The Greenback experienced a minor eight-pip slump, before the currency settled at 119.64. Although technical studies suggest a neutral outcome for Thursday, the Buck is still likely to edge up, as a correction must take place after a plunge. The nearest resistance and support levels remain unchanged, and the pair will most likely stay in the tight range between them.
Daily chart
The hourly chart shows that the Greenback has been appreciating since the beginning of the day. The currency pierced through all of the SMAs, several times tested the resistance at 119.82, until finally breached it as well. At the moment the pair keeps rising, attempting to erase Tuesday's slump, but several new resistances emerge on the way.
Hourly chart
Market sentiment slowly turning around
Bulls stopped gaining advantage over bears, as 60% (previously 61%) of traders are optimistic about the US Dollar's prospects. At the same time, the percentage of commands to acquire the Greenback lost two percentage points to 69%.
OANDA traders are as optimistic with respect to the Greenback, since 59% of open positions are long. In the meantime, the attitude of the SAXO Bank clients remained unchanged and on the negative side, being that 52% of open positions are short and the remaining 48% are long.
Spreads (avg, pip) / Trading volume / Volatility
21% of traders see USD/JPY above 124.5 by mid-May
The sentiment among Dukascopy traders is rather strong for this currency pair, as the average expectation for the end of this week is located around 119.9 level, while 66% of all votes are currently bullish.
KusumFx is expecting a positive reaction on the USD/JPY pair, as he mentioned that "USD has been in a up-trend from September 2012 and is currently trading in a very narrow range." Basing his forecast on Fibonacci retracement levels, he also added that "the price will be somewhere between 120.57 and 122.00 in early March 2015." Meanwhile, Likerty supports the bearish outcome on the Buck, as he said that the Yen is going to continue its correction, which started from 120.50's.