- 52% of all pending orders are to sell the Buck
- Bears take up only 51% of the market
- The 55-day SMA and the 38.20% Fibo around 106.45 represent immediate resistance
- Support is 104.00
- 52% of the survey participants expect the US Dollar to cost less than 106.50 yen in three months
- Upcoming events: US Manufacturing PMI, Japanese Trade Balance
Official figures from the US Department of Labor showed on Thursday that the number of Americans filing for government unemployment benefits in the week ended July 16 dropped to 253,000 from 254,000 registered in the previous seven days, signalling that the labor market continues to improve. In the meantime, market analysts expected initial jobless claims to rise to 271,000 in the reported period, after remaining at a three-month low of 254,000 filings for two consecutive weeks. Last week was the 72nd consecutive week that initial claims were below the 300,000 level, extending the longest streak since 1973. Meanwhile, it is expected that jobless claims data can be volatile in July as automakers begin the process of temporarily shutting down plants to retool them for the new model year. In Michigan last week, applications for jobless benefits decreased 9,600 on an unadjusted basis, while claims in Ohio fell 2,500.
Other data on Thursday showed that factory activity in the country's mid-Atlantic region contracted in July, as the Philly Fed Manufacturing Index fell to -2.9 in the reported month, compared to the previous month's reading of 4.7, while analysts anticipated a slight improvement to 5.1 points.
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 is the only event to influence the USD/JPY pair on Friday
The US Manufacturing PMI is to rock the stage today, as there are no other important events to have an impact on the USD/JPY pair. It captures 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 condition in the United States. Readings above 50 imply economy is expanding, making investors understood it as a bullish for the USD, whereas a result below 50 points for an economic contraction, and weighs negatively on the currency.USD/JPY on the edge of sustaining more losses
The Japanese Yen overperformed on Thursday, as the USD/JPY currency pair dropped to the 105.80 level, rather than finding support at 106.00. Nevertheless, the anticipated decline took place, leaving the Greenback under a set of resistances once again. The 38.20% Fibo and the 55-day SMA are now likely to prevent the Buck from edging higher, with risks of the 105.00 major level getting pierced again present. Despite the negative outlook, technical indicators in the daily timeframe retain bullish signals, but yesterday's losses are unlikely to be erased completely even if bulls manage take over.The USD/JPY pair is seen breaking through the ascending channel to the downside, but for an hourly chart it lasted for a solid period of time. The 200-hour SMA is providing sufficient support to prevent the pair from falling below 105.50, thus, a return to 107.00 is possible.
Hourly chart
Bears are now in the majority, but taking up only 51% of the market (previously 50%). The number of sell orders also takes the larger part of the market, namely 52%, compared to 45% on Thursday.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 55% of positions opened by its clients are long. Similarly, 53% of positions opened by Saxo Bank traders are long as well, compared to 52% on Thursday.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to fall below 106.50 yen
Slightly more than half of the surveyed (52%) now assume that the US Dollar is to cost less than 106.50 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 25% of the voters. According to the votes collected between June 22 and July 22, the mean forecast for Oct 22 is 105.65. At the same time, 12% of the surveyed believe the Greenback could cost between 100.50 and 102.00 yen in three months.