- Number of buy orders decreased from 72 to 58%
- 56% of all positions remain long
- 20% of traders expect the US Dollar to cost between 123.00 and 124.50 yen in three months
- The closest support retains its position around 119.80, namely the weekly PP and the 55-day SMA, while the nearest resistance is still located around 120.50, represented by the Bollinger band and weekly R1
- Upcoming events: US Retail and Core Retail Sales, US Import Prices, US Business Inventories, US Crude Oil Inventories, US 10-y Bond Auction
US job openings fell below 5 million in March, pointing to a slight deterioration in the labour market at the end of the first quarter. US employers announced 4.994 million open job positions in the reported month, compared with the 5.108 million vacancies economists had predicted after the Department of Labor reported 5.144 million openings in February. The previous reading had been initially estimated at 5.133 million. The revised February data marks the second highest reading of the series going back to the early 2000s. The record was set in January 2001, when the US economy had 5.273 million job openings. While the markets tend to ignore the JOLTS report, the indicator is closely watched by Fed policy makers, and is frequently mentioned by Chair Janet Yellen.
Yet, the non-farm payrolls report last week indicated that hiring recovered to 223,000 in April from the lowest level in four years of 85,000 in March. Overall, gains in payrolls have moderated this year after employers hired more than 3.1 million workers last year, the most in 15 years. The unemployment rate inched lower to 5.4% from 5.5% in March. Meanwhile, the Fed's exhaustive measure of the US jobs market remained at the lowest level since mid-2012. The labour market conditions index declined to -1.9 points last month from a steeply downwardly revised -1.8 points in March.
Stephen Pope, a managing partner, gives his opinion about the current situation concerning the Bank of Japan. He says that if you want to find any shock revelations about what the BoJ are up to, one actually has to start digging quite deeply into the data. Stephen comments that the data a lot of data mining is required, because at the current time it is uncertain whether the Abenomics, the Three Arrows, are really working. He also adds that "there has been a lot of pressure from the Government on the BoJ to be a heavy intervention machine, so almost sacrificing their independence in order of making Abenomics work and pushing Japan forward."
Craig Erlam, Senior Market Analyst at OANDA, commenting on the prospects of the Fed raising interest rates this year, said that there is no real difference between the Fed raising rates either in June or in September. In his opinion September just seems more likely, because it gives the Fed more time to prepare for the hike. Craig also does not see the immediate necessity for a rate hike in September, but thinks that "there is just a number of policymakers who want to test the water with the first hike, see how the markets react, how economy holds up."
US Retail Sales
Japanese data showed good figures early today, while later today we also expect the US Retail Sales data for April. Even though the Retail Sales returned to growth in March (after declining for the past three months), but growth is expected to slow down dramatically again. Ultimately, the US Dollar should experience more weakness against the Yen today.
Marcel Thieliant, economist from Capital Economics, forecasts USD/JPY to be at 130.00 by the end of the second quarter. The analyst commented that he expects the BoJ to step up the pace of easing at the end of this month. "This is obviously not what other economists expect, if that happens, we will probably see a strong drop in the Yen against the Dollar and against other major currencies" - he said.
USD/JPY pressured down by soft data
Yet again week US fundamentals weighed on the Greenback, forcing it to fall against the Yen. The USD/JPY attempted to erase Monday's gains, but the 55-day SMA at 119.85 prevented further decline. Moreover, the support cluster around 119.80 should turn the tide for the US Dollar today, as technical indicators are bolstering the positive outcome. However, we still expect the Buck to drop down at least to 119.60 support, represented by the 20-day SMA and the monthly PP.
Daily chart
As the US Dollar started to rebound after last Friday's losses, the outcome was rather grim. Monday's rally ended on Tuesday and the 120 level failed to provide support. Even the next target, namely the 200-hour SMA, was reached and pierced yesterday. Right now the pair is consolidating, awaiting for the data release to kick it back into motion.
Hourly chart
Bullish sentiment unchanged
Market sentiment remains unchanged, with 56% of all positions being long. The number of buy orders, on the other hand, decreased from 72 to 58%.
Market sentiment of OANDA Group worsened again, since 60% of traders are now long the Buck (previously 62%). SAXO Group traders' outlook towards the Greenback became more positive, with the share of longs adding four percentage points, now taking up 68% of the market.
Spreads (avg, pip) / Trading volume / Volatility
20% of traders expect the US Dollar to cost between 123.00 and 124.50 yen in three months
The mean forecast for August 13 is 121.23. The vast majority of the survey participants (65%) expect the US Dollar to cost more than 120 yen. The most popular price interval is divided between 123.00 and 124.50 yen, selected by 20% of traders. The second popular price range, 121.50-123.00, chosen by 14% of the surveyed.
This week's overall sentiment for the USD/JPY pair is still bearish, as 63.6% of all traders are supporting the negative case for the pair. Slightly more than 28% of traders expect the pair to close above the 119.2 level towards the end of present working week.
Aslamhammad, a trader with the bullish outlook towards the USD/JPY, expects the pair to rise back to 122, as the price is holding steady above 119 level. Meanwhile, another community member and a trader with a bearish outlook, bharatholsa, suggests that the US Dollar will weaken against the Yen due to soft economic data in the US recently. He also mentioned that the NFP is more likely to be negative in line with ADP.