- The number of buy orders decreased from 69 to 58%
- The share of long positions grew even further, as 67% of traders have a positive outlook towards the Dollar
- 19% of traders see USD/JPY between 123.0-124.5 by end of June
- Nearest significant resistance is represented by the weekly PP at 120.27, while closest support is the cluster around 119.05
- Upcoming events: US FOMC Fischer Speech, US Final GDP, US Revised UoM Consumer Sentiment, US Fed Chair Yellen Speech, Japanese Preliminary Industrial Production
The total number of claims for unemployment benefits in the United States dropped more than expected for the previous week ended March 21, as brightening economic outlook for the world's biggest economy is having a positive impact on job creation and decreases the number of lay-offs. In total, 282,000 Americans filed applications for jobless benefits during the weekly period, down from 291,000 a week before. Analysts, in turn, waited for completely no changes in this statistical indicator. Falling unemployment claims usually coincide with higher levels of hiring; therefore, the upcoming reports on payrolls should reveal a continuous improving situation. Employment is also one of the most important signals for the Federal Reserve to determine its monetary policy stance.
While labour market is registering positive changes for the past couple of years, with more than three million new jobs created, consumer prices in the US remain subdued. Negative impetus was also provided by oil prices in the second part of 2014. Fed's officials have stated last Wednesday that they are going to monitor situation with both labour market and inflation, before giving any guidance for an increase of the benchmark interest rate. Meanwhile, some members of the FOMC, including the St. Louis Fed President James Bullard, called for a hike as soon as possible, in order to comply with economic reality, namely the current expansion phase.
Jasper Lawler, CMC Market Analyst, expects Japan's economy to start losing momentum. Jasper commented that despite the level of stimulus the Japanese economy had, a decline is right around the corner. He said that "even though we have seen some pick up in the quarters passed, now there is some indication that actually the growth in manufacturing is not as strong as it should be, but is actually looking as if it is moving towards a decline."US Final GDP and Fed Chair's Speech
The Bureau of Economic Analysis is going to publish the data on the US Final GDP, which is expected to grow faster compared to the preceding quarter. Nevertheless, Yellen's statement, due later in the evening, might also elicit a strong response from the market. Concerning the Japanese economy, the Preliminary Industrial Production figure is to be released only on Sunday with no available forecast.
Andrew Grantham, senior economist in CIBC World Markets, gave his forecast on whether inflation in the US will pick up any time soon. He said that an increase in prices is unlikely to accelerate, at least on the core level and probably even on the headline level, "given that we have seen some further decline in oil prices since the end of February." According to him, it is not likely that year-view rates of inflation are going to get any stronger in the near-term (next 2-3 months). Still, "in terms of Fed policy, as long as they [headline and core inflation] do not decelerate significantly, they could still be looking to hike in June."
USD/JPY: a rebound is nigh?
On Thursday the US Dollar dipped despite the better-than-expected Jobless Claims data. The Greenback tested a support cluster around 119.00, but lacked the strength to penetrate the barrier and, as a result, USD/JPY settled at 119.16. Through Friday the Buck is likely to rebound, as it is on the edge of the strong support cluster. The rally might extend to 119.60, unless the fundamentals disappoint later today. Nearest resistance lies at 120.27, represented by the weekly PP.
Daily chart
Yesterday, the pair went below the 119 level and fell down to 118.33, breaching the support trend-line of the bearish channel. However, the sell-off did not last long, and the US Dollar managed to crawl out of the pit. The Buck returned within the channel borders, and the currency has recently touched the upper trend-line. Nonetheless, as evidenced by the recent developments, the channel trend-lines are becoming less and less reliable.
Hourly chart
More people bet on the Dollar
The share of long positions grew even further, as 67% of traders have a positive outlook towards the Dollar. Meanwhile, the number of buy orders decreased, from 69 to 58%.
The percentage of OANDA's bullish positions returned to its previous level of 62%. Meanwhile, SAXO Group traders' outlook towards the US Dollar improved again, since 74% of participants are long the Greenback.
Spreads (avg, pip) / Trading volume / Volatility
19% of traders see USD/JPY in 123-124.5 interval by end-June
Concerning the present week, the sentiment experienced substantial changes, as a vast majority of votes now are positive, namely 57.1% of them. The average prediction for Friday of this week is located around the 119.8 major level, but more than 22% of all votes are placed in the range between the 120.3 and 121.3 levels.
One of the community members, Likerty, has a bullish outlook towards USD/JPY. He said the story is different with the Dollar/Yen, than with other majors. However, the traders does not expect the Greenback to go over the 121.40 level. Megajorko, another survey participant, retains a bearish outlook towards the currency pair. The community member mentioned that there is a high possibility that the Yen will start gaining power and that he still prefers to be short the Buck for the time being.