The Buck experienced mixed performance on Tuesday, having appreciated against some major peers, but also declined against the others. The USD/JPY gained the most, having surged 0.88%, followed by a 0.49% rally of the USD/CHF. At the same time, the Greenback added only 0.16% against the Kiwi, while remaining relatively unchanged against the Euro, edging only 0.08% higher. Against the remaining commodity currencies the American Dollar lost 0.65% and 0.40%, namely versus the Aussie and the Loonie, respectively; meanwhile, the Cable also slid 0.26%.
American employers posted the most open jobs in eight months in March, but total hiring slowed, sending mixed signals of the labour market. Job openings rose 2.7% to 5.76 million, the most since July, the Labor Department reported. That may suggest better hiring in the coming months. Yet hiring slowed to 5.3 million from 5.5 million. That indicates employers became more reluctant to fill open positions, due to slower economic growth from October through March. The decline in hiring echoes a pullback that was reported last week, when the official data showed net hiring slowed in April. Yet the increase in job openings suggests that job gains could pick up again in the coming months. Last week's non-farm payrolls report showed the world's biggest economy created the fewest number of jobs in seven months and Americans dropped out of the labour force, casting doubts on whether the Fed will hike interest rates before the end of the year. According to the Labor Department, non-farm payrolls rose by 160,000 jobs last month as construction employment barely climb and the retail sector shed jobs. That was the smallest gain since September and below the first-quarter average job growth of 200,000.
Moreover, employers appeared to add 19,000 fewer jobs in February and March than previously estimated. While the unemployment remained unchanged at 5.0% it came at cost of people dropping out of the labour force. The share of Americans participating in the labour force dropped to 62.8% in April from 63.0% in March.
Vatsal Srivastava, director at the Blackwater Consulting, explains why the US Dollar is a advancing against the Yen this week. Even though he says that there was nothing fundamentally driving USD/JPY on Monday, one of the key drivers is the falling oil prices, which is actually boosting the Yen, in his opinion, as there is an addition cause for more QQE. Vatsal Srivastava also mentions that "it is going to be a hard economic ride ahead and there seems to be no light on the horizon for Japan as of now". "Lets hope for the best," he added.
US Federal Budget Balance and Japanese Current Account
Among the events to influence the USD/JPY pair today the US Federal Budget Balance is due. It 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. On the other hand, a negative figure (deficit) that indicates government debt is seen as bearish. Furthermore, early tomorrow the Japanese Current Account is to be released by the Ministry of Finance. It is a net flow of current transactions, including goods, services and interest payments into and out of Japan. A current account surplus indicates that flow of capital into Japan exceeds the capital reduction. A current account deficit indicates that there is a net capital outflow from these sources.USD/JPY under the risk of falling back under 109.00
On Tuesday the US Dollar edged higher against the Yen, prolonging its bullish momentum after a sharp 500-pip slump two weeks ago. Since then the pair managed to negate slightly more than a half of those losses, having retaken the 109.00 mark yesterday. The Yen's safe-haven status appears to be prevailing today, thus, pushing the USD/JPY currency pair to the downside. The pair faces a tough support area around 108.60, represented by the 20-day SMA, the weekly R2 and the monthly PP. As a result, this support could prompt the Greenback to continue moving higher, in which case the weekly R3 at 109.83 will be the first target.Bulls remain in control
Bulls also dominate the OANDA market, where 61% of open positions are long, eight percentage points less from Tuesday. Meanwhile, the sentiment as reported by SAXO Bank remains bullish at 55%, compared to 57% yesterday.
Spreads (avg, pip) / Trading volume / Volatility
More than a half expect the exchange rate to rise above 114 yen