- The number of buy orders edged up, now accounting for 61% of the market
- Now 72% of all positions are long (previously 70%)
- 18% of traders expect USD/JPY between 123.00 and 124.50 in three months
- Nearest resistance rests around 120.92, represented by the Bollinger band and the weekly R2, while closest support lies around 119.70, the 55-day SMA
- Upcoming events: US FOMC Member Dudley Speech, US Crude Oil Inventories, US FOMC Meeting Minutes
The number of US job openings surged to the highest level in 14 years in February, US Labor Department reported. Openings soared by 168,000 to 5.13 million in the reported month, hitting the highest since January 2001. That was the second highest reading in the history of the series starting from December 2000, following the nearly 5.3 million job openings recorded in the following January. The report also showed that there were 4.9 million hires in February, slightly less than 4.99 million seen in the preceding month. At the same time the number of people quitting jobs dropped to 2.7 million after hitting a seven-year high of 2.8 million in January. A large number of quits is indicative of a dynamic labour market, in which workers feel confident to leave one job for another.
Meanwhile, Americans' confidence in the nation's economic performance reached eight-year high, the latest CNBC All-America Economic survey showed. A record 27% assess the state of the world's number one economy as excellent or good compared with 16% a year ago. The report also reveal only 28% of US citizens expect the economy to improve next year, a one-point improvement from last quarter. Despite constantly strengthening fundamentals, Minneapolis Fed President Narayana Kocherlakota argued that the Fed should be "extraordinarily patient", putting off the rate hike at least until the second half of next year due to still low employment and excessively low inflation.
An analyst from CMC Markets, Collin Cieszynski, said that "the US Dollar has had a massive rally over the last six months or so on expectations that the Fed would start raising interest rates, with most of the Street expecting that they would start at their June meeting." However, Collin indicates that the situation has changed recently, commenting that "there have been signs," such as: "at the last Fed meeting a number of Fed members lowered their forecast for GDP, inflation, and Fed fund, suggesting they were starting to back away a bit from their interest rate normalisation programme." The analyst concludes that "this shortfall in employment is another nail in that coffin, because the Fed has a mandate of keeping inflation under control and also boosting employment, so it is hard to see how they are going to start raising interest rates if employment is actually falling in the US."
Andrew Grantham, senior economist in CIBC World Markets, says that an increase in prices in the United States 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 improbable 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 [the Fed officials] could still be looking to hike in June."
US FOMC Meeting Minutes
With the BoJ's Monetary Policy Statement already passed, only several data releases on the US economy remain. The US Crude Oil Inventories are expected to decline by 1.1 million barrels, but the most important event will be the US FOMC Meeting Minutes, and the officials may somewhat change their rhetoric given the latest data.
USD/JPY negates two-week losses
Yesterday, the US Dollar advanced versus the Yen for the second day, exceeding the Monday's rally. The Greenback's performance erased all the losses suffered in the past two weeks, as none of the resistances had the capacity to stop the pair from advancing. Moreover, the 120 barrier was overcome, and the Buck settled at 120.28. However, the Yen is expected to strengthen against the Dollar today, and the 120 level is likely to be pierced again, but to the downside. The pair should stabilise around 119.60 by the end of the day.
Daily chart
Lately USD/JPY has been seen fluctuating severely around 119.50. With the latest developments, USD might decline beyond the 119.5 level once again. If no significant changes occur, there will be a good chance of a slide towards 119.00 within the next two weeks.
Hourly chart
Bulls grow in numbers
Bullish market sentiment among SWFX traders strengthened. Now 72% of all positions are long (previously 70%). The number of buy orders edged up as well, now accounting for 61% of the market.
Liquidity consumers' confidence at OANDA has deteriorated, with 57% of participants being long the Greenback (previously 63%). At the same time, SAXO Group traders' outlook has worsened as well, since 54% of positions are currently long.
Spreads (avg, pip) / Trading volume / Volatility
18% of traders expect USD/JPY between 123.00 and 124.50 in three months
The mean forecast for July 8 is 121.44. However, the majority of survey participants (56%) expect the Greenback to cost more than 121.50 yen after a three-month period. The most popular choice was 123.00-124.50, voted for by 18% of the surveyed. The second place is taken by the 121.50-123.00 interval, selected by just one percentage point less (17%) traders.
This week the pair's sentiment changed considerably, as now 80% of all votes are bearish. The average expectation for April 10 stays just above the 118.60 level.
Pipx, one of the community participants, has a bullish outlook towards the US Dollar this week. He commented that "a trend line on the recent lows shows a strong bullish trend." However, TradeWizard, another survey participant, worked his magic and shared his bearish view on the USD/JPY pair. In his opinion "the pair was unable to break the barrier of 120.50, and it is slowly falling down." As a result, his short-term prediction is bearish.