- 51% of pending orders are to sell the US Dollar
- 63% of all open positions are short
- The nearest significant resistance is around 114.40
- Downside potential down to 113.60
- Upcoming Events: US Labour Market Conditions Index m/m, US Consumer Credit m/m, Japanese M2 Money Stock y/y, Preliminary Machine Tool Orders y/y
US private companies showed a stronger-than-expected job growth in June, indicating that the labour market continued strengthening further. The official Labour Department's report showed that the country's private sector added 222K jobs last month, surpassing market expectations for a modest increase of around 175K in June. Meanwhile, May's figure was revised up to 152K from 138K registered previously.
The US non-farm payrolls increase, the second largest within this year, was supported by strong gains in government, healthcare, restaurants as well as business and professional services sectors, the Labour Department revealed. Notwithstanding job growth acceleration, the unemployment rate was slightly higher, at 4.4%, suggesting that more people were left without job. In addition, the report showed that average hourly earnings rose modestly, jumping 0.2% over the month of June, with 2.5% yearly increase in wages. Analysts believed that weak productivity was curbing wages, while some of them were optimistic over the tightening labour, expecting it to spur wage growth at a faster pace.
Minor Data Releases
No important data releases that could shake the market tremendously are expected in this session. The United States are to release monthly Labour Market Conditions Index and June consumer credit data at 1400 and 1900GMT, accordingly. Likewise, Japan is to publish yearly data on M2 money stock at 2350 GMT and preliminary machine tool orders at 0600GMT on Tuesday morning.
USD/JPY trades near two-month high
Following the hourly surge on Friday morning, the US Dollar lost its strong upside momentum against the Yen and continued to trade with moderate gains. Contrary to expectations, the monthly R1 did not provide enough resistance to hinder or halt the pair. Thus, the rate has approached a two-month high at 114.34, suggesting that this level could finally reverse the Greenback to the downside. Technical oscillators may likewise reach the overbought area in this session, adding some ground to the aforementioned scenario. Nevertheless, there is still some upside potential until the upper channel boundary circa 114.60. In case bears are to prevail, the 55– or 100-hour SMAs located at 113.60 and 113.42 on Monday morning may be considered the bottom limit today.Hourly chart
Being driven by strong upside momentum on Friday, the Greenback approached the monthly R1 at 113.94 but failed to overcome this level. The expected breakout occurred today. Taking into account technical signals, it is likely that the pair remains above this mark today.
Daily chart
SWFX market sentiment is bearish, as 63% of all open positions are short, compared to 57% on Friday. In addition, 51% of pending orders are to sell the Greenback.
OANDA clients are bullish on the US Dollar, as the number of traders holding long positions has remained at 52%. Meanwhile, bearish sentiment at Saxo Bank has likewise not changed, being at 53%.
Spreads (avg, pip) / Trading volume / Volatility
Traders bullish on US Dollar
Traders expect that the US Dollar may appreciate up to the 113.84 mark against the Yen in three months' time (113.53 on Friday). Currently, only 50% of all forecasts fall above the current spot price which is located near the 113.67 mark, demonstrating that more traders have chosen a range below this level since Friday morning. Nevertheless, the majority of voters still expect the US Dollar to cost somewhere between 114.00 and 115.50 yen in early October, with 26% of survey participants choosing this trading range.