- SWFX market sentiment is 56% bearish
- 65% of pending orders in 100-pip range to buy
- Closest support is located at 110.53
- Upcoming Events: US NFIB Small Business Index, US JOLTS Job Openings, IBD/TIPP Economic Optimism, Japan's M2 Money Stock y/y, Japan's Preliminary Machine Tool Orders y/y
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
This session is marked by some data releases of minor and intermediate importance. First, the Unites States is to release the Small Business Index at 1000GMT by the National Federation of Independent Business. Second, the Bureau of Labor Statistics is to publish the number of job openings for the month of June at 1400GMT together with Economic Optimism by IBD/TIPP. Third, two sets of data from Japan are scheduled for this evening and tomorrow morning, namely, M2 Money Stock at 2350GMT and Preliminary Machine Tool Orders at 0600GMT.
USD/JPY moves along channel line
On Monday, the US Dollar was driven by neither bears nor bulls, thus resulting in a movement sideways. This stillness was broken this morning when the rate fell down to the 110.60 mark and crossed the 200-hour SMA from above. Thus, it remained stranded in a very narrow range between the 200-, 100– and 55-hour SMAs and the monthly PP in the 110.65/55 area. The previously drawn channel down was shifted to the upside, demonstrating that the Greenback has been quite sticky to the upper channel boundary. This implies that the given currency may eventually breach to the upside. However, it is not yet clear if this move will occur today. For now, the rate is likely to either move sideways near the weekly PP or trade lower along the upper channel line.Hourly chart
This session has started with the US Dollar weakening against the Yen, thus approaching the weekly PP at 110.53. In case the given line is breached, there is no support restricting the pair down to the weekly S1 at 110.02. This level, however, is unlikely to be reached, as no signals indicate that such a fall will occur. Thus, the base scenario favours the Greenback remaining above the weekly PP, but nevertheless in the red area.
Daily chart
SWFX traders have increased their bearish sentiment, as the number of short positions in this session is 56% (+3%). However, 60% of pending orders are to buy the US Dollar (+2%).
Meanwhile, OANDA clients are bullish on the pair, as 62% of all open positions are long (-4%). Similar viewpoint is held by Saxo Bank clients whose open positions are 58% long (-3%).