- 62% of all pending orders in the 100-pip range are to purchase the American Dollar
- 71% of all open positions are long
- The weekly PP at 104.87 represents immediate resistance
- Support is around 102.75
- 56% of the survey participants expect the US Dollar to cost more than 109.50 yen in three months
- Upcoming events: US Durable and Core Durable Goods Orders, US Revised UoM Consumer Sentiment
The number of people applying first-time unemployment benefits in the US fell from 277,000 to 259,000, gradually beating the 277,000 forecast, as reported by the Department of Labor. Strong data suggests that the labor market is on the path to recover from its recent period of softness. Moreover, the governor of the Federal Reserve Janet Yellen stated, that a lower figure of the Unemployment Claims indicates improvements in the labor market overall, having a greater impact than the poor payrolls data.
In the meantime, the US Manufacturing PMI also showed signs of improvements, with the index rising from 50.7 to 51.4 in May. Despite such an increase, the index still remained below its 2009-2013 average of 54.1. The main gauge of weaker-than-average results were falling oil prices, hurting manufacturers connected with the energy industry by lowering demand for equipment in their sector.
Finally, the US New Home Sales numbers were released, coming out worse than anticipated, with sales falling 6% to 551,000 units (annualized) in May. Moreover, the April's reading was revised downward, namely from 619,000 to 586,000, as reported by the Department of Commerce, also contributing to the poor situation.
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 shifts to US Durable and Core Durable Goods Orders
Although the USD/JPY suffered from the ‘Brexit' result today, there are still upcoming events from the US such as the US Durable and Core Durable Goods Orders. The Durable Goods Orders are a measure of costs of orders, received by manufacturers for durable goods, which means goods planned to last for three years or more, such as motor vehicles and appliances. As those durable products often involve large investments, they are sensitive to the US economic situation. Core Durable Goods Orders, however, exclude the transport sector.USD/JPY swims in murky waters
The USD/JPY currency pair also suffered from the aftermath of the ‘Brexit' vote, causing the exchange rate to drop to 99.00 yen. Nevertheless, for the moment the Greenback managed to retreat from this intraday low, while the prospects are for the pair to remain above the 102.00 level. The 102.00 mark is reinforced by the broadening falling wedge's support line, as well as the weekly S2, making that area hard to pierce even for such sharp news as the ‘Brexit'. Moreover, the Buck could even jump back above 103.00, as another demand area there might be sufficient to limit the losses.Daily chart
On the hourly chart the 50.0% Fibo appears to be providing solid support, as it prevented the USD/JPY from falling beyond the 110.72 level earlier today. The Buck is now regaining the bullish momentum, but we might still see limitations around 104.00 if it managed to edge that high over the day.
Hourly chart
Today 71% of all open positions are long, unchanged since Thursday, whereas 62% of all pending orders in the 100-pip range are to purchase the American Dollar.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 73% of positions opened by its clients are long. Similarly, 55% of positions opened by Saxo Bank traders are long as well, compared to 60% on Thursday.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to rise above 109.50 yen
Slightly more than half of the surveyed (56%) now assume that the US Dollar is to cost more than 109.50 yen after three month time. The most popular choice, however, implies that the Greenback is to cost between 111.00 and 112.50 yen in three months, selected by 16% of the voters. According to the votes collected between May 24 and June 24, the mean forecast for Sep 24 is 109.39. At the same time, 15% of the surveyed believe the Greenback could cost either between 106.50 and 108.00 yen, or between 112.50 and 114.00 yen or even more than 114.00 yen in three months.
This week, in contrast, the pair is seen to appreciate as it depicted on the chart, with a number of bulls significantly outweighing bears. USD/JPY is forecasted to reach the 105.3 level by Friday, June 24.
Megajorko suggests that the US Dollar is to strengthen against the Yen by Friday 24 of June. "Although we are in a strong bearish channel, so I suppose there must be some correction this week", he explained his outlook.
Meanwhile, another trader with the Dukascopy Community, bakafx, supposes that price will be between the monthly S2 and the last two-week low.