- The share of purchase orders returned to its Wednesday's level of 57%
- Exactly three quarters of all open positions are long
- Resistance is around 115.00
- Immediate support is at 113.30, namely the weekly PP and the 20-day SMA
- 55% of the survey participants expect the US Dollar to cost less than 117 yen in three months
- Upcoming events: US Average Hourly Earnings, US Non-Farm Employment Change, US Unemployment Rate, US Trade Balance
Another set of weak fundamental data caused the Greenback to sustain losses against most of other major currencies yesterday. The pair experienced a 0.80% decline against the Euro, following with 0.77%, 0.73% and 0.68% declines against the Aussie, the Kiwi and the Pound, respectively. The USD/CHF dropped 0.46% lower over the day, while the Buck remained relatively unchanged against the Canadian counterpart, edging only 0.10% down. The only gain was registered against the safe haven Yen, amid lower demand for riskier assets.
The number of Americans seeking jobless benefits unexpectedly increased last week, but remained at a level that is consistent with gradual improvement in the labour market. Initial claims for unemployment benefits rose 6,000 to a seasonally adjusted 278,000 in the week ended February 27. Claims have climbed the past two weeks, but are still down from the end of January. The four-week moving average of claims, which smoothens weekly volatility, fell 1,750 to 270,250 last week. A report earlier in the week showed US private sector created more jobs than expected in February, another sign that the US job market remains resilient despite economic weakness overseas and volatility in financial markets. According to payroll processor ADP, US private companies hired 214,000 workers last month, whereas economists had expected a gain of 190,000 jobs. Investors now await US Labor Department's more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment. Economists are forecasting total non-farm employment to have grown 190,000 in February, while the unemployment rate is predicted to remain unchanged at 4.9%.
A separate report showed the US service sector grew more slowly in February, according to the Institute for Supply Management. The index of non-manufacturing activity dropped to 53.4 from 53.5 in January.
Vatsal Srivastava, director at the Blackwater Consulting, explains why the US Dollar is a advancing against the Yen this week. Even though he says that there was nothing fundamentally driving USD/JPY on Monday, one of the key drivers is the falling oil prices, which is actually boosting the Yen, in his opinion, as there is an addition cause for more QQE. Vatsal Srivastava also mentions that "it is going to be a hard economic ride ahead and there seems to be no light on the horizon for Japan as of now". "Lets hope for the best," he added.
US Non-Farm Payrolls and Unemployment Rate
The US data is the main event today everyone is focusing on. Among that data most attention is to be paid to the Non-Farm Employment Change figures. The Non-Farm Payrolls are released by the US Department of Labor, which presents the number of people on the payrolls of all non-agricultural businesses. The monthly changes in payrolls can be excessively volatile. At the same time, the Unemployment Rate is due. It shows the number of unemployed workers divided by the total civilian labor force. If the rate is up, it indicates a lack of expansion within the US economy. It also tends to have a noticeable effect on USD pairs.USD/JPY takes another shot at retaking 114.00
A set of poor fundamentals caused the American Dollar to retreat from its intraday high and close trade relatively unchanged against the Yen, adding only 20 pips on Thursday. The USD/JPY currency pair remains supported by the weekly PP at 113.00, which is now also bolstered by the 20-day SMA. As a result, we expect the bullish momentum to prevail, but gains are likely to be limited by a strong resistance area around 115.00, represented by the weekly R1, the monthly PP and the Bollinger band. On the other hand, daily technical indicators are now giving bearish signs, suggesting that with sufficient impetus from weak NFP data the nearest support could be pierced.Daily chart
On the hourly chart the USD/JPY currency pair is seen within an ascending channel pattern, which receiver an additional good confirmation earlier today. The pair is now likely to surge until it reaches the 114.88 level, a breach of which is to set the Buck on a bullish route towards the 116.00 level or higher – until price reaches the channel's upper border; unless poor NFP data pushes the exchange rate below the support line.
Hourly chart
SWFX sentiment stays bullish
Traders at OANDA and Saxo Bank have a diametrically opposite view of the pair's future. Clients of both brokers are mostly bullish. Canadian-based foreign exchange company reports that 64% of open positions are long, compared to 63% on Thursday, and the Danish bank reports that 58% of its clients' positions are long, compared to 57% previously.
Spreads (avg, pip) / Trading volume / Volatility
More than a half expect the exchange rate to fall under 117 yen
The majority of the survey participants (55%) expect the US Dollar to cost less than 117.00 yen in three months. The most popular choice, however, is the 120.00-121.50 price intervals, selected by 22% of the voters. According to the votes collected between Feb 04 and March 04, the mean forecast for June 04 is 115.70. At the same time, 15% of the surveyed believe the Greenback could fall in the 111.00-112.50 price interval after a three month period.
This week, traders are expecting pure negative development of the pair, opening short position more often than long ones.
On the bullish side of the barricade, Trendmaster suggests that the "USD/JPY has been benefiting from risk aversion since the beginning of January. This week I am expecting the currency pair to trade within a range or slightly bullish," he mentioned.
Meanwhile, Daytrader21 believes that the Yen could post more gains against the US currency by the end of the week. "The USD/JPY will more likely to be trading below the 115.00 psychological number as the slide in equity market is not over yet, so current risk-off environment should push investor into the safe-haven currency like the Japanese Yen which gained substantially in current environment," he backed his view.