- The portion of buy orders inched up from 61 to 62%
- 59% of traders are long the US Dollar
- Immediate resistance lies at 113.19
- The closest support rests circa 111.50
- Upcoming events: US JOLTS Job Openings, US Trade Balance, US Consumer Credit, Japanese Current Account
US companies created more jobs than expected last month, following the disappointing December figure. The Bureau of Labor Statistics revealed on Friday that nonfarm payrolls rose 227,000 in January, compared with the preceding month's upwardly revised 157,000, while market analysts anticipated an increase to 170,000 in the reported month. Meanwhile, the unemployment rate came in at 4.8% last month, up from December's reading of 4.7%. Friday's data also showed that average hourly earnings grew 0.1% in January, following the prior month's downwardly revised 0.2% and falling behind the 0.3% rise market forecast. Earlier this week, the Federal Reserve declined to raise interest rates. However, policymakers maintained their projection of three hikes in 2017. Separately, the Institute of Supply Management reported its Non-Manufacturing Purchasing Managers' Index fell to 56.5 in January from the preceding month's 57.2, whereas analysts penciled in a slight decrease to 57.0 points.
Overall, the slight decrease in the headline Index was mainly driven by the weaker New Orders Index, which dropped to 58.6 from 60.7 in the previous month; however, order backlogs held on the same level. Moreover, the ISM said the Employment Index advanced to 54.7, while the Price Index surged to 59.0 from 56.0, representing an increase in inflationary pressures.
Relatively quiet Tuesday, secondary US fundamentals due
On Tuesday attention turns to the US fundamentals, such as the Trade Balance. It is a balance between exports and imports of total goods and services. A positive value shows trade surplus, while a negative value shows trade deficit. It is an even that generates some volatility for the USD. If a steady demand in exchange for US exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the USD. Another event that could have some impact is the Consumer Credit. It is an amount of money that individuals borrowed. It shows if consumers can afford large expenses, which can fuel economic growth. However, a high figure may also indicate that the economy is overheating. As consumers borrow in order to live beyond their means. Additionally, some attention could be paid to the Japanese Current Account data, as it is a net flow of current transactions, including goods, services and interest payments into and out of Japan. A current account surplus indicates that the flow of capital into Japan exceeds the capital reduction. A current account deficit indicates that there is a net capital outflow from these sources.USD/JPY attempts to trim Monday's losses
The Japanese Yen managed to outperform the American Dollar on Monday, ultimately adding 76 pips during the day, with the immediate demand area limiting the losses. The successfully close above the 111.50 mark suggests the USD/JPY pair could rebound today, even though technical studies are unable to confirm this possibility. There are no solid resistances in close proximity to the spot price, implying the pair could keep recovering until the 113.00 level is reached within the next two days. On the other hand, Monday's decline caused the strong psychological support around 112.60/50 to be pierced, which can now lead to more weakness, with the main target being 110.30.Daily chart
Another day of weakness caused the psychological support area to be broken, but the USD/JPY pair still appears to have bottomed out, for the time being at least. From this point on the Buck is likely to attempt another recovery, but the 200-hour SMA is still expected to hold, ultimately causing another U-turn.
Hourly chart
Today 59% of traders are long the US Dollar (previously 58%), whereas the portion of buy orders inched up from 61 to 62%.
Right now 54% of OANDA clients are bulls, compared to 55% on Monday. In the meantime, Saxo Bank clients remain on the bullish side, being that 57% of their open positions are now long and the remaining 43% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between January 07 and February 07, traders expect the US Dollar to appreciate to 115.79 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 58% of all forecasts fall below 117 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 120.00 and 121.50 yen in three months, with 14% of the survey participants choosing this trading ranges. At the same time, the second most popular interval was the 111.00-112.50 ones, with 12% of survey participants choosing it.