- The share of sell orders surged from 52 to 73%
- Bulls take up 51% of the market
- The 55-day SMA, the weekly PP and the 38.20% Fibo around 106.45 represent immediate resistance
- Support is 105.11
- 50% of the survey participants expect the US Dollar to cost less than 106.50 yen in three months
- Upcoming events: US Markit Services PMI, US CB Consumer Confidence, US New Home Sales
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.
Uneventful Monday
Monday is a dull day in terms of fundamental data releases, but on Tuesday attention could be paid to the US Markit Services PMI and the New Home Sales figures. The Services PMI capture business conditions in the services sector. As the services sector dominates a large part of total GDP, the services PMI is an important indicator of the overall economic condition in US. As for the New Home Sales, they are an important measure of housing market conditions. House buyers spend money on furnishing and financing their homes so as a result the demand for goods, services and the employees is stimulated.USD/JPY gravitates towards 106.00
Although the USD/JPY pair managed to inch higher on Friday, it was unable to climb over the immediate resistance area, where supply remains strong even today. The Buck is in a tight spot between the 106.00 major level and the cluster at 106.50, awaiting for a catalyst to trigger movement. According to technical indicators, the pair is to edge higher again today, but a breach of the resistance area at 106.50 is unlikely. The Greenback might be on the edge of reversing its recently acquired short-term bullish trend, and technical studies support this outlook. The upcoming BoJ meeting on Friday are expected to shine some light on the pair's further performance.The USD/JPY pair was 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, while the 38.20% Fibo is acting as a resistance, keeping the Buck from making its way back to 107.00.
Hourly chart
Bulls are now in the majority, taking up 51% of the market (previously 49%). Meanwhile, the share of sell orders surged from 52 to 73%.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 56% of positions opened by its clients are long. Similarly, 54% of positions opened by Saxo Bank traders are long as well, compared to 53% on Friday.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to fall below 106.50 yen
Exactly half of the surveyed (50%) 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 25 and July 25, the mean forecast for Oct 25 is 105.64. At the same time, 13% of the surveyed believe the Greenback could cost between 100.50 and 102.00 yen in three months.