- SWFX market sentiment is 53% bearish
- 66% of pending orders in 100-pip range to buy
- Closest support is located at 110.53
- Upcoming Events: US Labour Market Conditions Index m/m, FOMC Member Kashkari speaks, US Consumer Credit m/m, Japan's Bank Lending y/y, Japanese Current Account
The US Dollar strengthened significantly against the Yen after the stronger-than-expected Non-Farm Payrolls report. After the release, the USD/JPY rose initially by 0.43% or 50 base points to be seen trading at 110.57. The Labour Department revealed that the US economy created 209K positions in July, surpassing forecasts for a 185K increase.
Meanwhile, the unemployment rate dropped to 4.3% from 4.4% in the reported period, matching expectations. Strong figures in conjunction with 0.3% wage growth, the strongest gain since February, provided good signs to expect better CPI and PPI reports this week. In this context, the Federal Reserve would be reassured that further policy normalisation is reasonable, keeping additional rate hikes on the table.
Minor data releases
The economic calendar in this trading session includes some minor data releases and fundamental events. The United States is to publish monthly Labour Market Conditions Index and Consumer Credit at 1400GTM and 1900GMT, while Japan will release data on Bank Lending and Current Account at 2350GMT. In addition, the President of the Federal Reserve Bank of Minneapolis Neel Kashkari is to speak at 1725GMT.
USD/JPY reaches 111.00 in wake of fundamentals
Friday morning was characterised by a lack of distinctive movement for the USD/JPY pair, as the rate remained in a relatively small range. Nevertheless, strong US employment data mid-session put an upward pressure on the Dollar that resulted in a 65-pip jump against the Yen. The rate halted at the 200-hour SMA and remained stranded below the given line on Monday morning, as well. Technical indicators suggest that the rate should trade lower within the next 24 hours. This prediction is in line with a channel down pattern which has bounded the US Dollar since early July. No market shakers are expected in this session; thus, the most likely trading range for the given pair is between the 200-, 55– and 100-hour SMAs in the 110.80/40 area.Hourly chart
Friday's strong appreciation confirmed once again the lower boundary of the symmetrical triangle. The pair continues to be driven by upside risks; however, the strong upside momentum has allayed tremendously. Given the hourly signals, it is more likely that the rate either ends this session with slight gains or enters the red area.
Daily chart
SWFX traders have not changed their bearish sentiment, as the number of short positions in this session is 53%. In addition, 58% of pending orders are to buy the US Dollar (-1%).
Meanwhile, OANDA clients are bullish on the pair, as 66% of all open positions are long (+6%). Similar viewpoint is held by Saxo Bank clients whose open positions are 61% long (+3%).