- The number of orders to acquire the Greenback edged up from 63 to 73%
- A rather large portion of bulls remains dominant in the market, namely 74%
- The 38.20% Fibo at 106.65 represents immediate resistance
- Support is at 105.55
- 54% of the survey participants expect the US Dollar to cost more than 114 yen in three months
- Upcoming events: US Labor Market Conditions Index, Fed Chair Yellen Speech, US Revised Nonfarm Productivity, US Consumer Credit, Japanese Current Account, Japanese Final GDP
In the wake of devastating NFP results on Friday, the US Dollar sustained serious losses across the board even during the weekend. The largest losses of 2.15% and 2.12% were registered against the Yen and the Kiwi, respectively, also followed by a 1.88% decline versus the Euro and 1.87% versus the Aussie. Meanwhile, the USD/CAD slumped only 1.21%, but the best USD-pair performer was the Cable, as the Buck lost the least, namely 0.65% versus the British currency.
The last Friday's US economy release proved to be unexpectedly disappointing since the employment picture showed the weakest payroll gains for at least six years. According to the data, the non-farm payrolls advanced by a seasonally adjusted 38,000 for the previous month, strongly below a revised of 123,000 figure registered for April as well as strongly below expectations for an acceleration of about 160,000. Overall, employers employed 59,000 fewer workers in March and April than previously reported. Majority of economists agreed that following Friday's disappointing US employment report could eliminate the chance that Fed officials would tighten policy during their meeting on June 14-15 in Washington as well as may make it difficult raise the rate in July.
The report, which was also released in the same day by the Labor Department is unemployment rate which went down to 4.7%. Meanwhile, following rate does not include those who did not actively look for employment or the underemployed who were working part time for economic reasons. The following data demonstrates the harshest drop in almost nine years since people abandon the labour force. Overall, the steep decline in the labour force during the last couple months of course defies hopes that disenfranchised workers are going to return to the jobs market.
Vatsal Srivastava, director at the Blackwater Consulting, explained why the US Dollar advanced against the Yen last week. He said there was nothing fundamentally driving USD/JPY on Monday, but one of the key drivers was the falling oil prices, which was actually boosting the Yen; in analyst's opinion, as there was an addition cause for more QQE. Vatsal Srivastava also mentioned 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 summed up.
Focus on Yellen's speech
Even though Monday is relatively quiet in terms of fundamental data and there are no events to have a serious impact on the USD/JPY pair today, Yellen's speech could still drive the pair rather significantly. As head of the central bank, she has more influence over the nation's currency value than anyone else. She is scheduled to speak today at 16:30 PM GMT.USD/JPY takes a shot at 107.00
Friday was an extremely unfortunate day for the USD/JPY, being that the pair dropped more than 200 pips, reaching the lowest level in five weeks. Technical indicators now imply that the bullish momentum is likely to prevail, which would mean a breach of the 38.20% Fibonacci retracement level, located at 106.65. In this case the second target will be the cluster circa 107.10, represented by the Monthly S1 and the Bollinger band. Nevertheless, the US Dollar has the potential to reach even the 107.60 level, but the base case scenario is still a close under the 107.00 mark.Daily chart
Weak NFP results caused the USD/JPY pair to breach the descending channel to the downside, with only the 38.20% Fibo attempt to provide any support. A possible rebound is to be limited, as no impetus is to cause the pair to recover from a 230-pip loss in one blow.
Hourly chart
Most SWFX traders are long USD/JPY
A rather large portion of bulls remains dominant in the market, namely 74% (previously 75%). Meanwhile, the number of orders to acquire the Greenback edged up from 63 to 73%.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 71% of positions opened by its clients are long. Similarly, 60% of positions opened by Saxo Bank traders are long as well, up from 56% on Friday.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to rise above 114 yen
Slightly more than a half of the surveyed (54%) now assumes that the US Dollar is to cost more than 114.00 yen after three month time. The most popular choice implies that the Greenback is to cost somewhere between 114.00 and 115.50 yen in three months, selected by slightly less than a quarter (24%) of the voters. According to the votes collected between May 06 and June 06, the mean forecast for Sep 06 is 112.63. At the same time, 17% of the surveyed believe the Greenback could cost more than 117 yen in three months.