- 62% of all pending orders are to purchase the US Dollar
- 61% of all open positions are long
- Immediate resistance lies at 113.32
- The closest support rests circa 111.80
- Upcoming events: US Nonfarm Payrolls, US Unemployment Rate, US Average Hourly Earnings, US Services PMI, US Factory Orders
The number of Americans filing for unemployment benefits dropped more than expected last week, official figures revealed on Thursday. The Labor Department reported initial jobless claims fell to a seasonally adjusted 246,000 in the week ending January 28 from the preceding week's upwardly revised 260,000, while analysts anticipated a slighter decline to 251,000. The result marked 100 weeks below the 300,000 level, the longest streak since 1973. At the Federal Reserve's last meeting, policymakers kept its benchmark overnight rate unchanged in a range of 0.50% to 0.75%. Thursday's data also showed that the four-moving average of claims, considered a better measure of labour market trends, advanced 2,250 to 248,000 last week.
Furthermore, continuing claims declined 39,000 to 2.06 million during the week ended January 21, while their four-week moving average fell 13,000 to 2.08 million. Last week's claims report has no impact on the NFP data for January, set for release on Friday. Economists expect nonfarm payrolls to show a gain of 170,000 jobs, following a sluggish December, when private companies created just 156,000 new jobs, missing the 175,000 gain forecast. Moreover, the unemployment rate is expected to remain unchanged at 4.7% in January. Wage growth is likely to boost consumer spending and support economic growth in the Q1 of 2017.
All attention is on the US NFP data
Today all focus turns to the US employment data. The US Nonfarm Payrolls present the number of new jobs created during the previous month, in all non-agricultural business. The monthly changes in payrolls can be extremely volatile, due to its high relation with economic policy decisions made by the Central Bank. The number is also subject to strong reviews in the upcoming months, and those, reviews also tend to trigger volatility in the forex board. The US Unemployment Rate is also an important reading, which is a percentage that surges from dividing the number of unemployed workers by the total civilian labor force. It represents the percentage of people actively seeking employment and willing to work. Usually, a higher rate is seen in recessionary economies, while on the contrary, a growing economy sees its unemployment rate decreasing. However, by itself the number can't determine the markets move, as it depends on the headline reading – the Nonfarm Payrolls. Among secondary data some attention could be paid to the US Services PMI. It captures business conditions in the services sector. As the services sector dominates a large part of total GDP, the Services PMI is an important indicator of the overall economic condition in the US.USD/JPY sets eye on 114.50
There were no surprises in the USD/JPY pair's performance yesterday, as the 112.60 psychological support remained intact in spite of the Yen taking the upper hand. From the technical perspective the Buck should now rebound, but with gains being capped around the 114.50 mark, where the monthly and the weekly PPs rest, as well as the 20 and the 55-day SMAs. A strong US NFP reading today could also indicate to a possible rate hike as early as in March, providing the US Dollar with a solid boost. However, technical indicators insist a bearish development is more probable, with the only strong support being the area around 110.25.Daily chart
The Buck once again is attempting to recover after having tested the area around 112.60/10, moving back towards the 200-hiur SMA. However, today the US Dollar has the opportunity to breach the given SMA, this time finding resistance above 114.00, namely where the resistance trend-line rests.
Hourly chart
Traders retain a positive outlook towards the Buck, as 61% of all open positions are now long, compared to 53% on Thursday. At the same time, 62% of all pending orders are to acquire the US Dollar (up from 56% yesterday).
Right now 56% of OANDA clients are bulls, compared to 52% on Thursday. In the meantime, Saxo Bank clients remain on the bullish side, being that 57% of their open positions are now long and the remaining 43% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between January 03 and February 03, traders expect the US Dollar to appreciate to 116.45 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 50% of all forecasts fall above 117 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 120.00 and 121.50 yen in three months, with 15% of the survey participants choosing this trading ranges. At the same time, the second most popular intervals were the 106.50-108.00 and the 111.00-112.50 ones, with 10% of survey participants choosing each of them.