The US unemployment rate dropped unexpectedly last month, as companies created more jobs than expected. The Department of Labour reported that US firms added 211K jobs to the economy in April, following the preceding month's revised down increase of 79K jobs and surpassing analysts' expectations for a 194K gain. Data also showed that the unemployment rate fell to 4.4%, down from March's 4.5%, whereas markets anticipated an acceleration to 4.6%. Meanwhile, average hourly earnings rose 0.3% last month, up from March's climb of 0.1% and in line with forecasts. According to analysts' projections, if job creation remains strong, the US labour market will likely hit full employment already this year. Friday's better-than-expected employment report combined with low initial jobless claims and the strong services PMI pushed up the odds of a June hike by the Federal Reserve.
Furthermore, some analysts said that the economy regained positive momentum in the Q1, suggesting that the Fed will likely be forced to raise rates at a quicker than initially expected pace this year.
No important data releases until Wednesday
USD/JPY to preserve the channel pattern
Strong US fundamentals helped the USD/JPY pair to completely recover from its intraday low on Friday and even edge 29 pips higher, retesting the descending channel's resistance line. Today the pair opened with a small bullish gap, but those gains are not expected to hold, with the channel's upper boundary still prevailing. The Greenback should now keep declining against the Yen until the 108.00 mark is reached. However, first the Buck is required to pierce the 55-day SMA, where demand could be sufficient and trigger another rally, eventually leading to the end of the channel pattern.Daily chart
Today 61% of traders are short the US Dollar, compared to 58% on Friday. Meanwhile, 52% of all pending orders are to sell the Buck (previously 58%).
Right now 52% of OANDA clients are bulls, losing four percent from before and the bullish sentiment has been holding around the same level for some time now. In the meantime, Saxo Bank clients manage to retain a positive outlook towards the US Dollar as well, being that 58% of their open positions are now long and the remaining 42% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar