- The number of sell orders slid from 64 to 62%
- Nearly three quarters (74%) of all open positions are now long
- The 20-day SMA, the weekly and the monthly PPs around 112.50 represent immediate resistance
- Support is around 110.90
- 57% of the survey participants expect the US Dollar to cost less than 114 yen in three months
- Upcoming events: US Factory Orders, US Labor Market Conditions Index
Even though the US NFP data surprised to the upside last Friday, the US currency was unable to post gains against all other major currencies. The only significant gain was registered against the British Pound, caused by a disappointed figure of the UK Manufacturing PMI on Friday, while the Buck also remained relatively unchanged against the Kiwi and the Loonie, adding only 0.06% and 0.05%, respectively. The EUR/USD's performance also was not the best, as the pair surged only 0.09% higher. The Greenback also significantly decline against the Japanese Yen (0.78%), followed by a 0.40% loss against the Swissie and 0.29% versus the Aussie.
Even though the US economy added more jobs than expected in March, the nation's unemployment rate climbed. According to the US Department of Labour, non-farm payrolls surged by 215,000 last month, following the upwardly revised reading of 245,000 in February. Nevertheless, the unemployment rate inched up slightly to 5%, driven up by a larger number of people looking for work. In January the jobless rate declined below 5% for the first time since 2008 and had remained there for the first two months. In addition to that, average hourly earnings rose by 0.3% last month, overshooting analysts' expectations, and were up 2.3% over the year ending in March.
A separate report showed US manufacturing grew in March, ending a five-month stretch of declines in factory activity. According to the Institute for Supply Management, its manufacturing index climbed to 51.8 last month from 49.5 in February. The rebound indicated that US factories are adapting to the turmoil overseas, where a stronger US Dollar and slowing economies in China, Japan and elsewhere have undermined sales. Nevertheless, the details of the report appeared to be somewhat uneven. New orders and production improved, but the measure of employment at manufacturers declined.
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 Factory Orders is the main USD driver today
This Monday is not as quiet as most previous ones, with the US Factory Orders and Labor Market Conditions Index data releases scheduled for today. The Factory orders, released by the US Census Bureau, is a measure of the total orders of durable and non-durable goods such as shipments (sales), inventories and orders at the manufacturing level which can offer insight into inflation and growth in the manufacturing sector. The Labor Market Conditions Index is designed to estimate labor market activity, but it usually has a mild effect on the US Dollar pairs, as the indicators, used in compiling the index, have already been released.USD/JPY to continue edging lower
The USD/JPY retained its weakness after Yellen's dovish stance last week, which resulted in the pair's 90-pip slump on Friday. The Buck is still subject to a possible decline today, but with the immediate support, namely the Bollinger band, the weekly and the monthly s1s, most likely limiting the losses around 111.00 psychological level. Technical indicators keep giving mixed signals in the daily timeframe, suggesting a possibility of the Greenback retaking the 112.00 major level exists, whereas the closest resistance area rests only circa 112.50 in face of the 20-day SMA, the weekly and the monthly PPs. The base case scenario is a drop closer towards the down-trend below 111.00.Daily chart
The US Dollar continued to decline against the Yen, ever since it reached the down-trend at 113.50 last week. Right now the pair's target is the March low at 110.66, unless some fundamental events triggers a buying spree earlier.
Hourly chart
Bulls remain in control
Bulls also dominate the OANDA market, where 65% of open positions are long, compared to 61% on Friday. The sentiment as reported by SAXO Bank remains bullish - 61% of currently open positions are long, up from 58% on Friday.
Spreads (avg, pip) / Trading volume / Volatility
More than a half expect the exchange rate to fall under 114 yen
The majority (57%) 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 to cost somewhere between 106.50 and 108.00 yen in three months, selected by 23% of the voters. According to the votes collected between March 04 and April 04, the mean forecast for July 04 is 112.77. At the same time, 14% of the surveyed believe the Greenback could cost either between 111.00 and 112.50 yen or between 117.00 and 118.50 yen in three months.