- The number of orders to purchase the US currency increased from 47 to 56%
- 56% of all open positions are now long
- The nearest resistance is located around 104.03
- The closest support rests at 103.75
- Upcoming events: US Average Hourly Earnings, US Non-Farm Employment Change, US Unemployment Rate, FOMC Members Fischer, Mester, George and Brainard Speeches
The number of Americans filing for unemployment benefits dropped to its lowest level in 43 years, official figures revealed on Thursday. According to the US Department of Labor, initial jobless claims fell 5,000 to a seasonally adjusted 249,000 in the week ending October 1, compared to the preceding week's reading of 254,000, while market analysts anticipated a slight rise to 255,000 in the reported period. It was the 83rd consecutive week of initial claims remaining below the 300,000 level, the longest streak since 1973. Furthermore, the four-moving average of claims, considered a better measure of labor market trends, declined 2,500 to 253,000 last week, the lowest level since December of 1973. The data also showed the number of continuing claims decreased 6,000 to 2.058 million in the week ended September 24, while its four-week moving average declined 21,000 to 2.095 million.
Meanwhile, analysts expect Friday's NFP report to announce 171,000 new jobs for September and the unemployment rate to remain unchanged at 4.9%. Immediately after the release of initial jobless claims, the US Dollar rose against other major currencies, trading at 1.1179 against the Euro, 1.2641 against the British Pound and 103.89 against the Japanese Yen, while its Index advanced to 96.44.
US Nonfarm Payrolls and Unemployment Rate
Today attention should be paid to the US Nonfarm Payrolls. They 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. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish), although previous months reviews and the unemployment rate are as relevant as the headline figure, and therefore market's reaction depends on how the market assets them all. The Unemployment Rate also plays a huge role. It 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 can't determine the markets move as it depends on the headline reading, namely the Nonfarm Payrolls.USD/JPY trades flat ahead of NFP figures
The US Dollar outperformed the Japanese Yen for the eight consecutive time yesterday, successfully breaching the tough resistance area in front of the 104.00 major level. This opens the door for another rally, which would imply the USD/JPY closing above the 104.00 mark, thus, establishing a fresh two-month high. However, the upcoming payrolls data could turn the tide for the Greenback, causing it to fall back under 103.50, with the next support located only at 102.84, represented by the weekly R2. Meanwhile, technical studies retain mixed signals, unable to confirm either scenario.Daily chart
The pair has been trading within the borders of a falling wedge pattern since the beginning of the week. However, the lower boundary of the pattern is weaker, thus, risks of it getting breached are higher. A breach could eventually lead to a slump back towards 102.00.
Hourly chart
Bullish market sentiment keeps fading, as 56% of all open positions are now long, compared to 58% yesterday. At the same time, the number of orders to purchase the US currency increased from 47 to 56%.
Meanwhile, there has been an increase in the number of long positions at other brokers. Right now 60% of OANDA clients are bulls, compared to 57% yesterday. Saxo Bank clients, however, are as bullish as on Thursday, being that the portion of longs still takes up 56% of the market.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between September 07 and October 07, traders expect the US Dollar to depreciate to 104.54 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 76% of all forecasts fall above 102 yen, which is close to the current spot price. By far the most popular interval is 108.00-109.50, chosen by 18% of all the surveyed, compared to popularity of the 105.00-106.50, 106.50-108.00 and 109.50-111.00 intervals.