- The share of buy orders inched down from 75 to 56%
- 57% of traders are long the US Dollar
- The weekly PP at 104.70 represents immediate resistance
- Support is at 102.69
- 56% of the survey participants expect the US Dollar to cost less than 109.50 yen in three months
- Upcoming events: US Markit and ISM Manufacturing PMI, US Construction Spending
The number of Americans filing for unemployment benefits rose last week, but remained below a level associated with a healthy labour market. Jobless claims increased by 10,000 to 268,000 in the week ended June 25, a report from the Labour Department showed. Economists had expected jobless claims to edge up to 266,000 from the 259,000 originally reported for the previous week. Continuing claims decreased for the third week in the last four. Meanwhile, the Labour Department reported the less volatile four-week moving average came in at 266,760, unchanged from the previous week's revised average of 266,750. The report also showed that a reading on the number of people receiving ongoing unemployment assistance fell by 20,000 to 2.120 million in the week ended June 18th, which is lower than the 2.15 million print penciled in by forecasters.
Economists suggest this is a sign that the poor pace of jobs growth in April and May, which prevented the Federal Reserve from raising rates this month, was likely an aberration. It is unlikely for the labour market to slow down abruptly without a corresponding increase in layoffs, their reasoning goes. The next monthly employment report is scheduled for July 8.
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.
US Manufacturing PMI and US Construction Spending
Among important fundamental events US Manufacturing PMI's are due. In US the Manufacturing PMI is released by both the Institute for Supply Management and the Markit Economics, which capture business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the Manufacturing PMI is an important indicator of business conditions and the overall economic conditions in the US. Another event to focus on is the US Construction Spending, which is an indicator that measure the total amount of spending in the US on all types of construction. The residential construction component is useful for predicting future national new home sales and mortgage origination volume.USD/JPY struggles to post more gains
On Thursday the US Dollar managed to appreciate against the Japanese Yen for the fourth consecutive time, but with gains barely exceeding 35 pips. Technical indicators are no longer giving bearish signals in the daily timeframe, suggesting that the Buck could prolong its recovery for another day. Moreover, even though volatility edged below the weekly PP of 102.69, the pair still failed to close below that area this week; therefore, in case bears push the USD/JPY pair lower, the exchange rate will doubtfully fall beyond the weekly PP. Meanwhile, the nearest resistance rests around 104.70, represented by the monthly PP and the 20-day SMA.Daily chart
The USD/JPY's rally caused the down-trend to be breached for the second time yesterday, indicating that more bullish momentum is likely to follow. However, the 200-hour SMA appears to be providing sufficient resistance to keep the Buck pressured for now, with the fundamental data expected to provide the pair with the required impetus for further movement.
Hourly chart
There are 57% of traders being long the US Dollar today, while the share of buy orders inched down from 75 to 56%.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 68% of positions opened by its clients are long. Similarly, 60% of positions opened by Saxo Bank traders are long as well, compared to 59% on Thursday.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to fall below 109.50 yen
Exactly half of the surveyed (56%) now assume that the US Dollar is to cost less 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 June 01 and July 01, the mean forecast for Oct 01 is 108.60. At the same time, 13% of the surveyed believe the Greenback could cost either between 106.50 and 108.00 yen or between 108.00 and 109.50 yen in three months.