- The number of orders to acquire the US Dollar declined to 63%
- There are still more bulls than bears in the SWFX market, with 55% of all positions being long (previously 56%)
- 23% of traders see USD/JPY above 124.5 by mid-May
- Nearest resistance is located around 121.07 represented by the monthly R1, whereas closest support is represented by the weekly PP at 120.49
- Upcoming events: US JOLTS Job Openings (Jan), Japanese Core Machinery Orders (Jan)
US employers created more jobs than expected in February, while America's unemployment rate fell, reinforcing the view of a strengthening labour market that should encourage the Fed to raise interest rates this year. US non-farm payrolls rose by a seasonally adjusted 295,000 in February, according to the Labor Department. January's figure was downwardly revised to show 235,000 new jobs were added in the measured period. Yet, the headline figure celebrated its 13th month in a row above the 200,000 threshold. The US jobless rate ticked down to 5.5% from 5.7%, marking the lowest level since before the recession. The labour force participation rate fell slightly to 62.8% from 62.9%, and remained in a narrow 62.7% to 62.9% range since last April. Moreover, in February average hourly earnings climbed by 3 cents to $24.78, following a 12 cent jump in January, the biggest monthly advance since November 2008. On an annual basis, hourly wage growth rate is now 2% higher.
A separate report showed that January's trade deficit narrowed thanks to a decline in crude oil import prices. The nominal trade shortfall narrowed to $41.8 billion in January, following a revised $45.6 billion gap for December. Exports declined 2.9% to $189.4 billion, while imports plunged 3.9% to $231.2 billion.
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.US JOLTS Job Openings and Japanese Core Machinery Orders on Tuesday
There are no significant releases expected on Monday; however, on Tuesday the US JOLTS Job Openings are likely to show a slight increase from 5.03 to 5.04M, while the total value of orders placed with manufactures in Japan is expected to decline by 3.9%.
USD/JPY at 11-week high
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 Friday the USD/JPY pair rallied for the second consecutive day, until it reached the 11-week high at 120.82. The Greenback easily pierced through the Bollinger band, which intersects with the weekly R2 at 120.55; moreover, the pair tested the monthly R1, but was unable to breach this level. Technical studies suggest the Buck will edge up for the third day, amid poor Current Account and Final GDP data releases in Japan. However, the monthly R1 is still likely to interfere with the pair advancing further.
Daily chart
The hourly chart shows the US Dollar's climb since the beginning of Monday. However, after reaching a peak at 121.13, the USD/JPY pair began to retreat. Closest support lies at 120.66, represented by the daily PP, which should prevent additional losses.
Hourly chart
Still more bullish traders
There are still more bulls than bears in the SWFX market, with 55% of all positions being long (previously 56%). The number of orders to acquire the US Dollar declined as well, their share slid to 63%.
OANDA traders are as optimistic with respect to the Greenback, since also 55% of open positions are long. In the meantime, the SAXO Bank traders are pessimistic, being that 60% of open positions are short and the remaining 40% are long.