Initial jobless claims posted a surprise fall, fresh data revealed on Thursday. According to the Department of Labor, the number of Americans filing for unemployment benefits dropped to 262,000 in the week ended August 13, following the preceding week's reading of 266,000, whereas market analysts pencilled in a slight increase to 269,000 in the reported period. Four weeks ago, claims hit the 43-year low of 248,000 touched in mid-April. Last week's data marked the 76th consecutive week of initial jobless claims below the 300,000 level, the longest streak since 1973. Meanwhile, the four-week moving average, considered a better measure of labour market trends, jumped 2,500 to 265,250 in the week ending August 13. Other data released on Thursday showed an unexpectedly large improvement of business activity in the US mid-Atlantic region. According to the Philadelphia Federal Reserve's survey, the manufacturing activity index rose to 2.0 points in August, after dropping 2.9 in the preceding month, while economic desks anticipated an increase to 1.2 in the reported month.
Furthermore, the survey's six-month outlook indicator grew to 45.8 in August from last month's 33.7, posting the highest reading since January 2015. The survey tracks business activity in eastern Pennsylvania, southern New Jersey, and Delaware. The Philly Fed index is seen as one of the first monthly indicators of the health of the US economy.
No significant data until Thursday
There are no significant events to influence the USD/JPY on Monday. However, Tuesday is also rather empty in terms of events, with the only one being the US New Home Sales, which are forecasted to worsen and, thus, weigh on the Buck. Wednesday also has only one event, namely the US Existing Home Sales. Basically, in the upcoming three days there are no events worth paying attention to that could influence the USD/JPY pair.USD/JPY remains on the back foot
Having opened with a bullish gap today, the USD/JPY currency pair is now likely to be subject to weakness. The weekly PP, which is the nearest support, will doubtfully manage to keep the pair elevated if the bearish momentum prevails. The next target would then be the weekly S1 at 99.36, unless the 100.00 psychological mark succeeds in providing support before such a sharp drop. Potentially, the Buck could fall even slightly below the 99.00 level, as a solid support is located only around that area. Meanwhile, technical indicators support the possibility of the negative for the US Dollar outcome, as they retain bearish signals.Daily chart
Market sentiment barely changed over the weekend, as now 65% of traders hold long positions (previously 64%). At the same time, the share of purchase orders increased from 38 to 55%.
Sentiment at Saxo Bank is virtually the same - 66% of the Denmark-based clients are currently holding long positions. Traders at OANDA are even more confident in Dollar's appreciation - as many as 74% of open positions are long. Using the data as a contrarian indicator, the sentiment implies a cheaper Dollar. There is little room for new buyers to enter the market, and if the bulls start closing positions on profit-taking, this could create a strong selling pressure.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to fall below 105.00 yen