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.
Markit Manufacturing PMI and US New Home Sales
One of fundamental events that could have an impact on the USD/JPY pair today is the US Markit Manufacturing PMI. It captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the Manufacturing PMI is an important indicator of business conditions and the overall economic condition in the US. Another event is the New Home Sales, which are an important measure of housing market conditions. House buyers spend money on furnishing and financing their homes, so as a result the demand for goods, services and the employees is stimulated.USD/JPY subject to more weakness
Monday's decline caused the USD/JPY currency pair to almost completely erase the bullish gap. Moreover, the Buck crossed the immediate support yesterday, leaving the door open for a fall below 100.00 level, as today the closest area to limit the losses rests only at 99.36, namely the weekly S1. Technical indicators also suggest the pair is to edge lower, as they retain bearish signals in all timeframes. Ultimately, the Greenback could continue sliding down to around 0.96, where the lower border of the descending channel pattern is located, unless the tough support area around 98.70 triggers a rebound.Daily chart
Market sentiment slightly improved over the day, as 67% of all open positions are now long, compared to 65% yesterday. The portion of buy orders, however, lost 1% point, having fallen to 54%.
Sentiment at Saxo Bank is virtually the same - 71% of the Denmark-based clients are currently holding long positions. Traders at OANDA are even more confident in Dollar's appreciation - as many as 72% 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