- There are nearly three quarters (73%) of orders to sell the US Dollar
- Today 70% of traders hold long positions
- The weekly PP at 112.53 represent immediate support
- Resistances are the 20-day SMA and the monthly PP around 112.65
- 60% of the survey participants expect the US Dollar to cost less than 114 yen in three months
- Upcoming events: US Average Hourly Earnings, US Non-Farm Employment Change, US Unemployment Rate, US ISM Manufacturing PMI, US Revised UoM Consumer Sentiment, FOMC Member Mester Speech
The Greenback managed to outperform most major peers on Thursday, while sustaining losses only against the Swissie and the Euro. The Buck dropped 0.37% and 0.33% versus the Euro and the Swissie, respectively, while the largest gain was seen against the Loonie (0.29%). Versus the remaining commodity currencies, the Aussie and the Kiwi, the US Dollar added only 0.18% and 0.14%, respectively. The Buck also gained 0.12% against both the Yen and the Sterling.
The number of Americans applying for unemployment benefits unexpectedly increased last week, but a steep decline in layoffs in March suggested the labour market momentum remained intact. Initial claims for state unemployment benefits surged 11,000 to a seasonally adjusted 276,000 for the week ended March26, according to the Labor Department. Economists had forecast claims remaining unchanged at 265,000 in the latest week. The four-week moving average of claims, considered a better gauge of labour market trends as it strips out week-to-week volatility, rose 3,500 to 263,250 last week. Applications for unemployment benefits have now been below 300,000, a threshold associated with healthy labour market conditions, for 56 weeks, the longest stretch since 1973.
In the meantime, a report published earlier in the week showed US private companies continue to create new positions, with 200,000 jobs added this month, according to payrolls processor ADP and Moody's Analytics. A more comprehensive non-farm payrolls report from the Labor Department is due later in the day. Economists anticipate the report to show growth of 200,000 jobs, after surging 242,000 in February, with the unemployment rate remaining steady at 4.9%.
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 Employment Change and Unemployment Rate
Today a number of US fundamental data are due. First of all the nonfarm payrolls, released by the US Department of Labor, which presents the number of new jobs created during the previous month, in all non-agricultural business. The monthly changes in payrolls can be extremely volatile, due to its high relation with economic policy decisions made by the Central Bank. The number is also subject to strong reviews in the upcoming months, and those reviews also tend to trigger volatility in the forex board. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish), although previous months reviews and the unemployment rate are as relevant as the headline figure, and therefore market's reaction depends on how the market assets them all. Second, the US Unemployment Rate, released by the US Department of Labor, which is a percentage that surges from dividing the number of unemployed workers by the total civilian labor force. It represents the percentage of people actively seeking employment and willing to work. Usually, as a higher rate is seen in recessionary economies, while on the contrary, a growing economy sees its unemployment rate decreasing. Therefore, a decrease of the figure is seen as positive (or bullish) for the USD, while an increase is seen as negative (or bearish), although by itself, the number can't determinate the markets move as it depends on the headline reading, the Nonfarm Payroll.USD/JPY takes another shot at breaching 112.00
The US Dollar remained relatively unchanged against the Japanese Yen on Thursday, amid mixed fundamental data. Today the Greenback is pressured by the monthly PP and the 20-day SMA just above the opening price, while the weekly PP is providing immediate support at 112.53. In case the resistance cluster is breached, gains are then likely to be limited by the descending channel's upper border at 113.23. On the other hand, if bears push the USD/JPY currency pair lower, the second target will be the cluster around 111.55. The bearish scenario is more probable, as technical studies are in favour of this outcome.Daily chart
The USD/JPY currency pair is in a consolidation period ever since it bounced back from the down-trend at 113.60. The 200-hour SMA is weighing on the US Dollar from above, with a possibility of the resistance line getting reached again if the NFP data surprises to the upside.
Hourly chart
Bulls remain in control
Bulls also dominate the OANDA market, where 61% of open positions are long, compared to 59% on Thursday. The sentiment as reported by SAXO Bank remains bullish - 58% of currently open positions are long, unchanged since Thursday.
Spreads (avg, pip) / Trading volume / Volatility
More than a half expect the exchange rate to fall under 114 yen
The majority (60%) now assumes that the US Dollar is to cost less than 114.00 yen after three month time. The most popular choice implies that the Greenback is either to cost somewhere between 106.50 and 108.00 yen in three months, selected by 25% of the voters. According to the votes collected between March 01 and April 01, the mean forecast for July 01 is 112.53. At the same time, 12% of the surveyed believe the Greenback could cost between 117.00 and 118.50 yen in three months.
Dukascopy Community members have lost their faith in the currency pair, as following a drop to 50% in the army of bulls, this week the number of bullish votes slipped to 46.2%. A vast majority of traders believe that the pair will end this week around 112.7-mark, thus practically unchanged from the price at the moment of writing.
A trader with the Dukascopy Community, megajorko, believes that the US Dollar could still appreciate against the Japanese Yen. "This week's Friday will be the last in this month when there will be GDP announcements. After the strong sell off of the USD a correction is expected. The yen is starting to gain some power but it is in deep overbought levels so I am expecting a good correction this week," megajorko commented.
At the same time, Likerty suggests that more bearish momentum could follow. He said that "the USD/JPY is showing intentions to test the lows before deciding whether to proceed with its overdue bullish correction towards 117 and above."