- 68% of all pending orders are to sell the US Dollar
- 75% of all open positions are long
- The 50.0% Fibo and the weekly PP around 100.90 represent immediate resistance
- Support is around 99.60
- 55% of the survey participants expect the US Dollar to cost less than 108.00 yen in three months
- Upcoming events: FOMC Member George Speech, US Labor Market Conditions Index, Japanese Domestic Corproate Goods Price Index , FOMC Members Tarullo and Bullard Speeches, US JOLTS Job Openings, US Wholesale Inventories
On Friday, the US jobs market was surprised by positive economic data which expanded during the previous month, allaying fears that the economy was exposed for a sustained slowdown after a moderate start of this year. According to the data, the unemployment rate went up to 4.9% from 4.7% May. This could be explained mostly due to the 414,000 people who entered the US labour force, which spurred the labour force participation rate up to 62.7% in June compared to the 62.6% in May. Moreover, according to the data released by the Bureau of Labour Statistics, employers injected 287,000 jobs in June, up sharply from a soft addition of only 11,000 jobs the month before. Although, many analysts forecasted job growth to rebound, they were also highly waiting to see if the gloomy figures from May were repeated, which would be a hint that the economy might be sinking into deeper trouble.
In the meantime, May jobs report is only one report, as well as June's jobs report is just one report. Therefore, it is not enough in order to get a better sense of how these reports will affect the Fed's outlook for monetary policy.
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.
Silent beginning of the week
There are no significant events on Monday, but some impact might be from the Japanese Domestic Corporate Goods Price Index. It is a measure of prices for goods, purchased by domestic corporates in Japan. The DCGPI is correlated with the CPI and is a way to measure changes in manufacturing cost and inflation in Japan. Tuesday is also rather quiet in terms of fundamental data, but attention could be paid to the US JOLTS Job Openings, which is the number of job openings during the reported month, excluding the farming industry. Although it is released late, it could still have some impact on the market, as job openings are a leading indicator of overall employment.USD/JPY surges amid risk-appetite
The Greenback was rather volatile following the NFP data release on Friday, ending the week with a fifth consecutive day of declines, but unable to fall below the 100.00 level against the Yen. Risk-on sentiment appears to have returned to the markets today, providing the US currency with an early boost and an opportunity to reclaim the 101.00 major level. However, in order for the Buck to stabilise higher, it is required to pierce the weekly PP at 101.13. We reckon a retake of the 101.50 mark is also possible, even though technical indicators are giving bearish signals today.Daily chart
The US Dollar has been sliding down against the Japanese Yen since November 2015, but the pair now is attempting to begin its recovery. As indicated on the hourly chart, the USD/JPY is on the edge of piercing the first resistance line, which would open the door for more growth. However, the trend-line is reinforced by the 200-hour SMA and might prove difficult to be breached.
Hourly chart
There are three quarters (75%) of all open positions being long today (previously 73%). At the same time, there are significantly more orders to sell the US Dollar, namely 68% of them, compared to 49% on Friday.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 72% of positions opened by its clients are long. Similarly, 64% of positions opened by Saxo Bank traders are long as well, compared to 64% on Friday.
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 15% of the voters. According to the votes collected between June 11 and July 11, the mean forecast for Oct 11 is 106.35. At the same time, 12% of the surveyed believe the Greenback could cost either between 99.00 and 100.50 or between 109.50 and 111.00 in three months.