- The portion of buy orders fell down to 51%
- Bullish traders' sentiment is at 73%
- The weekly S1 at 101.52 represents immediate resistance
- Support is around 100.60
- 51% of the survey participants expect the US Dollar to cost less than 108.00 yen in three months
- Upcoming events: US Average Hourly Earnings, US Nonfarm Payrolls, US Unemployment Rate
The number of Americans filing unemployment benefits unexpectedly plunged last week, to the lowest level since April, giving a hint that labour market started to recover amid a shaky global economy. According to the Labor Department, initial claims for state unemployment benefits lost 16,000 to a seasonally adjusted 254,000 for the week ended July 2. Moreover, following drop left claims close to a 43-year low of 248,000 touched in mid-April. Economists, in turn, had expected jobless claims to reach 270,000 from the 268,000 originally reported for the June. Meanwhile, today, on Friday, the highly anticipated June employment report will show whether job creation remains sluggish or is starting to recover.
In the meantime, according to the Energy Information Agency, the US commercial crude stockpiles declined by 2.2 million barrels to a total of 524.4 million in the week through July 1. Oil futures diminished by nearly 5%, on this news, settling their lowest level in two months. Oil remains vulnerable to further price declines mainly due to the UK's plan to leave the European Union, as well as due to the stronger dollar.
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 Unemployment Rate and Nonfarm Payrolls
Today all attention is on the US data, namely the Unemployment Rate, 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 for the USD, while an increase is seen as negative, although by itself, the number cannot determine the markets move, as it depends on the headline reading, the Nonfarm Payrolls. The Payrolls present 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.USD/JPY under the risk of breaking the 100.00 barrier
The American Dollar was unable to outperform the Yen on Thursday, which led to a 55-pip drop in the Buck's value. Moreover, the support line of the broadening falling wedge pattern was pierced yesterday, indicating that more bearish momentum is to come. Today's NFP data could provide the required impetus for another downside development, causing the US Dollar to fall below 100 yen. Although there is a group of supports below that area, risks of even sharper losses are present. Meanwhile, technical indicators are unable to confirm the scenario, thus, the overwhelmingly strong Yen could also begin to weaken.Daily chart
As seen on the hourly chart, the USD/JPY currency pair has been trading in a bearish trend for more than two weeks now. As a result, there are risks of the Greenback suffering another decline, unable to breach the down-trend. Consequently, a drop below 100.00 is quite possible.
Hourly chart
Bullish traders' sentiment returned to its Tuesday's level of 73%, while the portion of buy orders lost 20% points, having fallen down to 51%.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 70% of positions opened by its clients are long. Similarly, 65% of positions opened by Saxo Bank traders are long as well, compared to 62% yesterday.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to fall below 108.00 yen
Slightly more than half of the surveyed (51%) now assume that the US Dollar is to cost less than 108.00 yen after three month time. The most popular choice, however, implies that the Greenback is to cost between 108.00 and 109.50 yen in three months, selected by 17% of the voters. According to the votes collected between June 08 and July 08, the mean forecast for Oct 08 is 106.75. At the same time, 14% of the surveyed believe the Greenback could cost between 111.00 and 112.50 in three months.