- The portion of buy orders inched up from 53 to 69%
- 57% of traders retain a positive outlook towards the Buck
- The 55-day SMA, the weekly PP and the 38.20% Fibo around 106.30 represent immediate resistance
- Support is at 105.11
- 55% of the survey participants expect the US Dollar to cost less than 108.00 yen in three months
- Upcoming events: US Advance GDP, US Advance GDP Price Index, US Employment Cost Index, Chicago PMI, US Revised UoM Consumer Sentiment
The number of people filing for unemployment benefits in the United States last week rose more than expected, fresh figures from the Department of Labor revealed on Thursday. Initial jobless claims grew by 14,000 to 266,000 in the week ended July 23, compared to the previous week's revised figure of 252,000, while market analysts expected jobless claims to rise by 9,000 to 261,000 in the reported week. Nevertheless, the less volatile and closely watched four-week moving average fell 1,000 to 256,500 in the preceding week, the lowest level since April. Furthermore, this week marked the 73rd consecutive week of initial jobless claims remaining below the 300,000 level, the longest streak since 1973. Meanwhile, the number of people continuing to receive unemployment aid increased by 7,000 to 2.14 million in the week ended July 16, whereas the four-week average of continuing jobless claims dropped to the lowest level since November 2000.
The Federal Reserve said on Wednesday that conditions in the US labor market improved significantly and that the latest indicators pointed to some increase in labor utilization. As markets expected, the US central bank left its key interest rates unchanged at its meeting on July 27, citing concerns over low inflation.
Vatsal Srivastava, director at the Blackwater Consulting, explained why the US Dollar advanced against the Yen last week. He said there was nothing fundamentally driving USD/JPY on Monday, but one of the key drivers was the falling oil prices, which was actually boosting the Yen; in analyst's opinion, as there was an addition cause for more QQE. Vatsal Srivastava also mentioned that "it is going to be a hard economic ride ahead and there seems to be no light on the horizon for Japan as of now." "Lets hope for the best," he summed up.
US GDP is the most important event today
A number of US fundamentals is due today, but most focus should be on the GDP figures. The GDP shows the monetary value of all the goods, services and structures produced within a country in a given period of time. GDP Annualized is a gross measure of market activity, because it indicates the pace at which a country's economy is growing or decreasing. Another important event is the Chicago PMI, which captures business conditions across Illinois, Indiana and Michigan. This index is an indicator of business trends and it is interrelated with the ISM Manufacturing Index. It is widely used to indicate the overall economic condition in the US. However, the BoJ's stimulus decision appears to have set the mood for the entire day.USD/JPY falls after BoJ fails to deliver
The US Dollar remained relatively unchanged against the Japanese Yen on Thursday, as a calm before the storm. And the storm did deliver, the USD/JPY currency pair plunged over 250 pips after the BoJ disappointed the markets with its decision earlier today. As a result, the third support level, namely the weekly S3 at 102.90, was reached, but the exchange rate could still partially recover and, thus, stabilise above the 104.00 level, amid a strong cluster providing support around 104.25, represented by the weekly S2, the monthly PP and the 20-day SMA. However, according to weekly and monthly technical studies, a close below 104.00 would not be out of the ordinary.The USD/JPY currency pair once again put the resistance line to the test yesterday, which resulted in more pressure and downside movement today. The potential support line failed to limit the losses, but the Buck could still make its way above 104.00 in order to put the down-trend to the test again.
Hourly chart
There are 57% of traders retaining a positive outlook towards the Buck, while the portion of buy orders inched up from 53 to 69%.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 62% of positions opened by its clients are long. Similarly, 54% of positions opened by Saxo Bank traders are long as well, compared to 58% on Thursday.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to fall below 108.00 yen
Slightly more than half of the surveyed (55%) now assume that the US Dollar is to cost less than 108.00 yen after three month time. The most popular choice, however, implies that the Greenback is to cost between 108.00 and 109.50 yen in three months, selected by 19% of the voters. According to the votes collected between June 29 and July 29, the mean forecast for Oct 29 is 106.34. At the same time, 16% of the surveyed believe the Greenback could cost more than 112.50 yen in three months.