- 58% of all pending orders are to sell USD/JPY
- 58% of all open positions are short
- USD/JPY opened at 112.48
- Upcoming events: US Average Hourly Earnings, US Non-Farm Employment Change, US Unemployment Rate, Fed Chair Yellen's speech
Good news came for bears Friday morning as the US Dollar continued reassuring the validity of the senior channel down pattern and paving the way towards strong downward risks for all time-frames. The pair took on where it had left off on Thursday, confirming the bounce off 112.84 – the upper trend-line of the senior channel down. Immediate support rests at 111.82 and we will most likely see it come into play over Friday's trading session as part of the move away from the channel trend-line.
The Conference Board CCI dropped more than experts estimated. In April, it lost 3.8% and reached 120.3, thus, marking the first decline since January. The fall was mainly attributable to the less optimistic view of business conditions and the labour market in the upcoming six months. The Department of Commerce reported that orders for durable goods in March soared only 0.7%, following February's increase of 1.8%. Excluding transportation items, orders for core durable goods plunged 0.2%, while analysts anticipated 0.4% growth. The US economy expanded at its weakest pace since the Q1 of 2014 in the three-month period to March, as consumer spending barely rose; however, a rise in business investment and improving pay growth held out hopes that the economy would regain momentum in the upcoming quarters. The Department of Commerce reported on Friday that the economy grew at a 0.7% annual pace in the Q1, following the preceding quarter's 2.1% and falling behind expectations for a 1.3% climb.
On the agenda: US Average Hourly Earnings, US Non-Farm Employment Change, US Unemployment Rate, Fed Chair Yellen's speech
In contrast to Thursday, the economic calendar is quite packed on Friday, and markets are getting ready for a bunch of US fata later today. Labour data, such as average hourly earnings, non-farm employment change as well as the unemployment rate are to be released at 13:30 GMT and given the likelihood that at least one of them might post a surprise, some volatility might spill into the USD/JPY market as well. Yellen's speech at 18:30 GMT could stir up currency markets in case any hints on further policy and its interaction with political realities are dropped.
USD/JPY gives in to senior channel
A confirmation of the previously established bounce off the senior channel down pattern on the daily chart came on Friday morning as the pair continued its way towards areas below further away from any upside risks. The pair is now likely to eye the support at 111.82 as a decent target, as it has already penetrated the 112.35 area which was the immediate support amid opening. Upside risks are currently limited to 112.84 where the upper trend-line of the channel is strengthened by the monthly R1.Daily chart
The hourly chart supports the falling scenario with a solid slip south, and even appears to be forming a channel down pattern for the early stages of the senior downwave. The pair posted a very strong red candle the night before and has now been floating flatly at its bottom range. We will most likely expect the flattish motion to extend and possibly to gain a bit of upward momentum in order to address the upper boundary of the junior channel.
Hourly chart
Market sentiment is becoming bearish, as 58% of all open positions are short and the remaining 42% are long. At the same time, the number of orders to buy the Buck stayed the same at 42%.
Right now 52% of OANDA clients are bulls, losing four percent from before and the bullish sentiment has been holding around the same level for some time now. In the meantime, Saxo Bank clients manage to retain a positive outlook towards the US Dollar as well, being that 58% of their open positions are now long and the remaining 41% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between April 05 and May 05, traders expect the US Dollar to appreciate to 110.63 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 53% of all forecasts fall under 111 yen, which is still above the current spot price. The majority of people who voted expect the US Dollar to cost somewhere between 112.50 and 114.00 or 108.00-109.5 yen in three months, with 15% of the survey participants choosing either one of these trading ranges. At the same time, the second most popular interval was the 106.500-108.00 and 114.00-115.50, with 11% of survey participants forecasting the range.