- The number of sell takes up 52% of the market
- 75% of all open positions are long
- The monthly PP, the weekly R2 and the 20-day SMA around 108.60 represent immediate resistance
- Support is around 107.88
- 55% of the survey participants expect the US Dollar to cost more than 114 yen in three months
- Upcoming events: FOMC Member Dudley Speech, US JOLTS Job Openings, US Wholesale Inventories
The US Dollar managed to post gains across the board, with only one exception registered against the Swiss Franc. The Greenback gained the most against the Yen and the Kiwi, namely 1.12% and 1.03%, respectively. The Yen weakened on speculation of BoJ intervention, whereas the Kiwi edged lower, amid the New Zealand's Finance Minister stating that the LVR rules could be tightened. The US Dollar also added 0.71% against the Aussie and 0.41% versus the Loonie, followed by a 0.19% against the Euro and 0.14% against the British Pound. As for the USD/CHF, the pair suffered a small decline of 0.13%.
The Fed's own labour market conditions index recovered last month in line with expectations, marking its highest level of the year thus far. The Labor Market Conditions Index climbed to -0.9 points in April, virtually matching economists' forecast for -1 point, and following an unrevised -2.1 points in March, according to the Fed's Board. The gauge averaged -2.2 points in the first quarter.
Last week's non-farm payrolls report showed the world's biggest economy created the fewest number of jobs in seven months and Americans dropped out of the labour force, casting doubts on whether the Fed will hike interest rates before the end of the year. According to the Labor Department, non-farm payrolls rose by 160,000 jobs last month as construction employment barely climb and the retail sector shed jobs. That was the smallest gain since September and below the first-quarter average job growth of 200,000. Moreover, employers appeared to add 19,000 fewer jobs in February and March than previously estimated. While the unemployment remained unchanged at 5.0% it came at cost of people dropping out of the labour force. The share of Americans participating in the labour force dropped to 62.8% in April from 63.0% in March.
Vatsal Srivastava, director at the Blackwater Consulting, explains why the US Dollar is a advancing against the Yen this week. Even though he says that there was nothing fundamentally driving USD/JPY on Monday, one of the key drivers is the falling oil prices, which is actually boosting the Yen, in his opinion, as there is an addition cause for more QQE. Vatsal Srivastava also mentions 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 added.
US JOLTS Job Openings is the main event today
Today's economic data releases on are unlikely to have a significant impact on the USD pairs, but could still help the Dollar's performance, nonetheless. The JOLTS Job Openings could have some impact on the USD pairs. The JOLTS Job Openings are released by the Bureau of Labor Statistics; they are a number of job openings during the reported month, excluding the farming industry. Although it is released late, it could still have an impact on the market, because job openings are a leading indicator of overall employment. Another possible event is the US Wholesale Inventories, which is released by the US Census Bureau. The Inventories are a change in the total value of goods held in inventory by wholesalers. It is also a signal of future business spending, because companies are more likely to acquire goods once inventories are depleted.USD/JPY keeps edging higher
With speculation of BoJ intervention and rising risk appetite, the US Dollar managed to add 125 pips against the Japanese Yen yesterday. Even though the USD/JPY currency pair now faces a tough resistance around 108.60, represented by the monthly PP, the weekly R2 and the 55-day SMA, the 109.00 major level could still be retaken, as the Yen keeps weakening, due to risk-on sentiment. Furthermore, technical indicators are no longer giving bearish signals, suggesting that the Greenback is likely to extend its recovery, after having slumped more than 500 pips two weeks ago.Daily chart
The 200-hour SMA yesterday was unable to limit the gains, thus, the 108.00 level was retaken yesterday, as was anticipated. The bullish momentum is also prevailing today, with the pair now facing the second psychological target, namely the 109.00 level, which could stall the appreciation.
Hourly chart
Bulls remain in control
Bulls also dominate the OANDA market, where 69% of open positions are long, two percentage points less from Monday. Meanwhile, the sentiment as reported by SAXO Bank remains bullish at 57%, unchanged since yesterday.
Spreads (avg, pip) / Trading volume / Volatility
More than a half expect the exchange rate to rise above 114 yen
More than half of the surveyed (55%) now assumes that the US Dollar is to cost more than 114.00 yen after three month time. The most popular choice implies that the Greenback is to cost somewhere between 114.00 and 115.50 yen in three months, selected by more than a quarter (33%) of the voters. According to the votes collected between April 10 and May 10, the mean forecast for August 10 is 111.80. At the same time, 19% of the surveyed believe the Greenback could cost between 115.50 and 117.00 yen in three months.