- 55% of all pending orders are to sell the US Dollar
- 62% of all open positions are short
- Immediate resistance lies at 114.70
- The closest support rests around 114.01
- Upcoming events: US Average Weekly Earnings, US Non-Farm Employment Change, US Unemployment Rate
The number of Americans filing for first-time unemployment benefits rose last week to the highest level since the summer, but the trend remained still consistent with a healthy signs of the US job market. According to the report, initial jobless claims rose to 268,000, showing an increase of 17,000 from the previous week's unrevised level of 251,000. Meanwhile, economists had expected jobless claims to reach 253,000 level. The following increase was much bigger than expected, thus jobless claims reached their highest level since hitting 270,000 in the week ended June 25th. Claims have been below 300,000 since early 2015, showing the longest such streak since 1970. Employers' reluctance to part with workers is one sign of a tight labor market.
In the meantime, US manufacturing was stronger than expected in November, since the strong greenback remains a headache for producers in the sector. According to the Institute of Supply Management and Markit Economics, the ISM PMI went up to 53.2 in November (52.5 expected.) Regional data received over the past month suggested improvement in the sector and had pointed to a strong national reading.
US Nonfarm Payrolls to have the most impact
Today all attention is on the US employment data, namely the 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 for the USD, while a low reading is seen as negative, 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. Another important even is the US Unemployment Rate. 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, the Nonfarm Payrolls.USD/JPY in limbo around 114.00, awaits NFP data
As was anticipated, the USD/JPY currency pair underwent a small corrective decline, but remained in a tight range between the immediate support and resistance levels. The Buck is now expected to rally, receiving momentum from the US NFP data later today. The main target is the 116.00 mark, but a surge further could be difficult to achieve, as the psychological resistance is also reinforced by the weekly R2 and the Bollinger band. Moreover, some data could weigh on the US Dollar, limiting the possible gains. Meanwhile, technical indicators also suggest that bulls are likely to prevail, as they keep giving positive signs.Daily chart
The USD/JPY currency pair appears to have entered a consolidation period ahead of the employment data, with trade anchored around the 114.00 level or the 23.60% Fibo. The 200-hour SMA keeps providing immediate support and the forecasts do suggest that further upside movement is likely.
Hourly chart
Bears grew stronger again, as 62% of all open positions are short today (previously 61%). At the same time, there are slightly less orders to sell the Greenback, namely 55% (down from 60% on Thursday).
Meanwhile, there has been a decrease in the number of long positions at other brokers. Right now 60% of OANDA clients are bears, compared to 58% on Thursday. In the meantime, Saxo Bank clients also remain slightly on the bearish side, being that the portion of shorts takes up 54% of the market.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between November 02 and December 02, traders expect the US Dollar to appreciate to 109.83 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 61% of all forecasts fall above 108 yen, which is close to the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 111.00 and 112.50 yen in three months, with 19% of the survey participants choosing that trading range. Meanwhile, the second most popular interval is the 105.00-106.50 one, chosen by 12% of all the surveyed, compared to popularity of the 106.50-108.00, 108.00-109.50 and 109.50-111.00 intervals.