- The share of sell orders remains unchanged at 52%
- 63% of all open positions are now short
- The nearest resistance is at 113.47
- Immediate support rests around 113.00
- Upcoming events: US JOLTS Job Openings, US Mortgage Delinquencies, US Import Price Index, US Monthly Budget Statement
The US unemployment rate dropped unexpectedly last month, as companies created more jobs than expected. The Department of Labour reported that US firms added 211K jobs to the economy in April, following the preceding month's revised down increase of 79K jobs and surpassing analysts' expectations for a 194K gain. Data also showed that the unemployment rate fell to 4.4%, down from March's 4.5%, whereas markets anticipated an acceleration to 4.6%. Meanwhile, average hourly earnings rose 0.3% last month, up from March's climb of 0.1% and in line with forecasts. According to analysts' projections, if job creation remains strong, the US labour market will likely hit full employment already this year. Friday's better-than-expected employment report combined with low initial jobless claims and the strong services PMI pushed up the odds of a June hike by the Federal Reserve.
Furthermore, some analysts said that the economy regained positive momentum in the Q1, suggesting that the Fed will likely be forced to raise rates at a quicker than initially expected pace this year.
No important data releases until Wednesday
There are no significant events worth paying attention to until Wednesday, when the US Import Price Index is due. It informs the changes in the price of imported products into the US. The higher the cost of imported goods, the stronger the effects they will have on inflation, redunding in a higher probability of a rate rise. Another event that could have some impact will be the US Monthly Budget Statement, which summarizes the financial activities of federal entities, disbursing officers, and Federal Reserve banks. A positive budget statement that receipts exceed budgetary outlays is seen as bullish for the USD.
USD/JPY sets eye on 114.00
Not only did the USD/JPY pair manage to recover from its intraday low yesterday, but even establish a new seven-week high of 113.30. The Greenback refuses to give up the bullish momentum, exploiting the recent recovery further, now aiming to reclaim the 114.00 major level. A successful attempt to reach this area is still likely to be short-lived, amid a tough resistance cluster located a few pips higher. Furthermore, assuming the given pair completely broke out from trading within the descending channel's borders, continued positive outcomes are nothing out of the ordinary, which could even lead to reaching a larger scale down-trend, currently located around 117.00.Daily chart
On the hourly chart the USD/JPY pierced the descending channel's resistance line, which suggests more bullish momentum could follow. On the other hand, for the past two weeks the pair appears to have remained within the borders of another channel, an ascending one, which is likely to trigger a decline today, due to the exchange rate reaching this channel's upper boundary earlier today. Should an upside breach occur, the broadening rising wedge pattern would assume dominance.
Hourly chart
Bears keep gaining numbers, as 63% of all open positions are now short. Meanwhile, the share of sell orders remains unchanged at 52%.
Right now 55% of OANDA clients are bulls, adding three percent from before, as the bullish sentiment has been holding around the same level for some time now. In the meantime, Saxo Bank clients manage to retain a neutral outlook towards the US Dollar, being that 51% of their open positions are now short and the remaining 49% are long.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between April 09 and May 09, traders expect the US Dollar to appreciate to 110.88 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 51% of all forecasts fall above 111 yen, which is still below the current spot price. The majority of people who voted expect the US Dollar to cost somewhere between 112.50 and 114.00 yen in three months, with 18% of the survey participants choosing this trading ranges. At the same time, the second most popular intervals were the 105.00-106.50 and the 115.50-117.00 ones, with 13% of survey participants forecasting either of these ranges.