- The portion of buy orders inched down from 59 to 56%
- 58% of all open positions are long
- Immediate resistance lies at 113.59
- The closest support rests circa 113.38
- Upcoming events: US PPI and Core PPI, Fed Chair Yellen's Speech
The number of Americans filing for first-time unemployment benefits declined to an almost 43-year low, official figure revealed on Thursday. Last week's drop in claims was driven by tightening labor market, which is likely to prompt wage growth. According to the US Department of Labor, national jobless claims declined 12,000, to 234,000, during the week ending February 4 from the preceding week's upwardly revised 246,000. Meanwhile, economists anticipated a slighter deceleration to 250,000 during the reported period. Filings have been below 300,000 for 101 straight weeks — the longest streak since 1973. In the meantime, the less volatile four-week moving average of initial claims dropped 3,750 to 244,250, the lowest level since November.
Furthermore, continuing claims increased 15,000 to 2.08 million during the week ended January 28, while their four-week moving average fell 3,750 to 2.08 million. These claims, reported with a one-week delay, reflect the number of people already collecting unemployment benefits. Other data released by the Commerce Department on Tuesday showed US wholesale inventories climbed 1% in December, following a similar gain in November. Excluding automobiles, wholesale stocks grew 0.9% in December. The change in private inventories contributed 1% to GDP growth in the final quarter of 2016.
Uneventful Monday
Monday is a completely quiet day, thus, all attention shifts to the fundamental data on Tuesday, such as the US PPI. It measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation. Meanwhile, the Core PPI excludes food and energy readings. Another important event on Tuesday will be Fed Chair Yellen's Speech. As head of the Central Bank, her words could have a serious impact on the markets.USD/JPY puts the down-trend to another test
Friday ended with the USD/JPY currency pair putting the bearish trend-line to another test, but ultimately leaving it intact. Another attempt was made earlier today, when the pair opened with a bullish gap and tried to reclaim the 114.00 mark. The weekly R1, however, appears to be providing strong resistance, which could cause the Buck to be sold sufficiently, making bears take over the market today. In this case the down-trend will be preserved once again, although risks of a breakout are now high. Either way the second resistance area around 114.30 is expected to hold, whereas any bearish development is to be limited by the 20-day SMA circa 113.38.Daily chart
Even though the USD/JPY currency pair confirmed the down-trend on Friday, during the weekend bulls managed to push the pair significantly higher, resulting in a breach of the down-trend. However, the 23.60% Fibo on the hourly chart provided resistance, and could still cause the exchange rate to return below the trend-line, as the outlook of the daily chart suggests.
Hourly chart
Bulls lost some numbers over the weekend, being that 58% of all open positions are now long (previously 61%). At the same time, the portion of buy orders inched down from 59 to 56%.
Right now 53% of OANDA clients are bulls, compared to 51% on Friday. In the meantime, Saxo Bank clients remain on the bullish side, being that 55% of their open positions are now long and the remaining 45% 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 13 and February 13, traders expect the US Dollar to appreciate to 114.46 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 50% of all forecasts fall below 114 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere either between 111.00 and 112.50 yen in three months, with 17% of the survey participants choosing this trading range. At the same time, the second most popular interval was the 106.50-108.00 one, with 15% of survey participants choosing it.