The US Dollar managed to post gains against almost all of other major currencies, with the only exception being the NZD/USD pair. The Kiwi added 1.30% against the Buck, retaining its strength after the RBNZ's decision to leave the cash rate unchanged. Nevertheless, the Greenback gained the most against the Euro, adding 0.70%, while also surging 0.55% versus the Swiss Franc and 0.53% versus the Aussie. The Loonie was luckier, as it allowed the American Dollar to gain only 0.24% against it. In the meantime, the Cable inched 0.33% lower, while the USD/JPY edged only 0.10% higher.
First-time jobless claims unexpectedly dropped during the last week while the number of Americans already receiving benefits declined to an almost 16-year low, pointing to sustained strength in the labour market. According, to the US Labour Department, the initial claims for state unemployment benefits declined 4,000 slipping to a seasonally adjusted 264,000 for the week ended June 4. Moreover, this drop is below the consensus of economists who expected the number to rise to 270,000. This was a welcome bit of news after last week's cluster munch. Despite, the May's hiring slowdown, now data is below the 300,000 mark, already for 66 straight weeks, showing the longest streak since 1973. However, still, the hiring slowdown shows a sluggish US economy. Moreover, the US growth came in at an annual rate of 1.4% from October through December and 0.8% from January through March. Moreover, a strong Greenback has hurt American exporters by making their products more expensive overseas, while low oil and natural gas prices have forced energy companies to slash investment.
Overall, the report indicates companies remain reluctant to reduce headcounts even after figures last week showed May was the worst month for hiring in almost six years.
Vatsal Srivastava, director at the Blackwater Consulting, explained why the US Dollar advanced against the Yen last week. He said there was nothing fundamentally driving USD/JPY on Monday, but one of the key drivers was the falling oil prices, which was actually boosting the Yen; in analyst's opinion, as there was an addition cause for more QQE. Vatsal Srivastava also mentioned 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 summed up.
Reuters/Michigan Consumer Sentiment and Federal Budget Balance
USD/JPY anchored around 107.00
Even though demand for safe-haven assets, such as the Yen, was higher on Thursday, the USD/JPY still managed to recover from its intraday low and retake the 107.00 level. Overall, the pair appears to be gravitating towards the monthly S1 each time, refusing to remain away from the 107.00 psychological level for long. Meanwhile, technical studies imply that another decline is due, but we should not rule out the possibility of the bullish momentum prevailing, as investors are taking profit on the pair's weakness. Nonetheless, the 38.20% Fibo at 106.65 should be a sufficient demand area to limit the losses, while the immediate resistance at 108.16 remains out of reach.
Market sentiment slightly weakened, as 71% of traders are now long the Buck, whereas the share of buy orders surged from 65 to 77%.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 69% of positions opened by its clients are long. Similarly, 59% of positions opened by Saxo Bank traders are long as well, down from 60% on Thursday.
Most SWFX traders are long USD/JPY
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to rise above 114 yen