- The buy/sell order ratio is now equal to one
- 53% of all positions are now long
- The weekly PP at 125.07 now acts as an immediate resistance
- The nearest support rests at 124.30, namely the weekly S1
- 19% of traders expect the Greenback to cost between 126 and 127.5 yen in three months
- Upcoming events today: US Crude Oil Inventories, Japanese BSI Manufacturing Index
The Federal Reserve closely watches the Jolts report. Fed Chairwoman Janet Yellen considers the number of people who voluntarily quit their jobs each month one of the key indicators of the labour market's health. In a growing economy, workers are more willing to leave their jobs as they are confident of finding another one soon. Meanwhile, according to the latest US Manpower Employment Outlook Survey, US employers' hiring intentions are among the strongest globally for the third quarter of 2015.
Sean Yokota, head of Asia Strategy at SEB, said that "if you look at Japan's public debt, which is about 243% of GDP, which is also one of the largest in the world." The economist comments that the BoJ needs to get the debt down before all the baby boomers retire, so they need to go through some fiscal consolidation, whether through tax hikes or through spending cuts. He also mentioned that such measures put Japan into recession, but he thinks that it also gave a bit of confidence to people; that this time when you increase the taxes, it does hit you short-term, but you can come out of the recession. Moreover, the Japanese economy is still doing relatively O.K. and the equity markets are still pretty high.
Craig Erlam, Senior Market Analyst at OANDA, commenting on the prospects of the Fed raising interest rates this year, said that there is no real difference between the Fed raising rates either in June or in September. In his opinion September just seems more likely, because it gives the Fed more time to prepare for the hike. Craig also does not see the immediate necessity for a rate hike in September, but thinks that "there is just a number of policymakers who want to test the water with the first hike, see how the markets react, how economy holds up."
BSI Manufacturing Index
The Japanese Core Machinery Orders data release was already released, which showed figures of 3.8%, up from 2.9% in the previous month. The data was outstanding, due to extremely low expectations, and strengthened the Yen substantially. More improvements are awaited in the Japanese economy, as the BSI Manufacturing Index is also likely to show good figures. Unfortunately, there will be no data concerning the US economy or worth mentioning today, therefore, the Yen should outweigh the US Dollar for another day
Marcel Thieliant, economist from Capital Economics, forecasts USD/JPY to be at 130.00 by the end of the second quarter. The analyst commented that he expects the BoJ to step up the pace of easing at the end of this month. "This is obviously not what other economists expect, if that happens, we will probably see a strong drop in the Yen against the Dollar and against other major currencies," Thieliant said.
USD/JPY tumbles for the third day
On Tuesday, the USD/JPY currency pair slid for the second consecutive day. The weekly S1 managed to limit the losses, but more weakness is expected today. During morning hours the US Dollar has already plunged below 123 major level, but is now being pushed back. The Greenback is likely to stabilise around 124 psychological level, even though technical studies retain bullish signals in the daily timeframe. However, the bearish trend should end today, whereas the Buck is to recover losses by week's end.
Daily chart
Although the 200-hour SMA held the USD/JPY from falling, the pair still edged down in the middle of the day. Nonetheless, the 124 psychological level attempted to cause a rebound, but the given SMA, now being a resistance, pushed the Greenback too deep down. We are likely to see a rebound tomorrow.
Hourly chart
Bullish are losing confidence
SWFX traders' sentiment slightly weakened, as only 53% of all positions are now long, while the buy/sell order ratio is now equal to one.
The market sentiments of other brokers are more bullish, with 55% of OANDA's positions being long. SAXO Group traders have an even more bullish outlook towards the Buck, being that 63% of them hold long positions.
Spreads (avg, pip) / Trading volume / Volatility
19% of traders expect the Greenback to cost between 126 and 127.5 yen in three months
According to the survey conducted between May 10 and June 10, 60% of the participants expect the US Dollar to cost more than 123 yen in three months. However, the mean forecast for September 10 is 122.87. Meanwhile, the 126.00-127.50 price interval received the largest amount votes, namely 19%.
Traders are getting less optimistic about the pair, as the proportion of optimists slipped to 70% this week from almost 84% a week earlier. The consensus forecast stands however, for 124.8.
One of the community members, Jignesh, shares his view on the USD/JPY. He mentioned that the pair is in a breakout mode after breaking the 2015 highs and it can continue to take this bullish momentum to break higher throughout the week. However, there are also those with a bearish outlook towards the given currency pair. Nuki 1981, for example, expects the Greenback to decline against the Yen, unless the pair will be able to break through an important resistance level at 126.00.