- 47% of all pending orders are to acquire the Buck
- 71% of traders hold long positions
- The 20-day SMA and the weekly R1 around 110.00 represent immediate resistance
- Support is at 108.70
- 61% of the survey participants expect the US Dollar to cost more than 114 yen in three months
- Upcoming events: US Markit Manufacturing PMI, US New Home Sales
The US Dollar remained strong on Thursday, as it appreciated against most major peers that day, with exception against the Japanese Yen. The Greenback gained the most against commodity-based currencies, namely against the Kiwi, the Aussie and the Loonie, adding 0.95%, 0.72% and 0.63%, respectively. Lesser gains were registered versus the Swiss Franc (0.31% and the Euro (0.09%), while the Buck remained relatively unchanged versus the Sterling, surging only 0.06%. The USD/JPY pair struggled to edge higher yesterday, with the safe-haven Yen adding 0.35% against the American Dollar.
The number of Americans applying for unemployment benefits unexpectedly declined last week, reaching its lowest level since 1973, suggesting a sharp slowdown in economic activity in the first quarter could be temporary. First-quarter gross domestic product growth estimates are currently as low as a 0.2% annualized rate. The economy expanded at a 1.4% rate in the fourth quarter. Initial jobless claims, a proxy for layoffs across the US, dropped by 6,000 to a seasonally adjusted 247,000 in the week ended April 16, according to the Labor Department. That was the lowest level for unemployment claims since the week of November 24, 1973. That also marked the 59th consecutive week that initial jobless claims remained below 300,000, the longest such streak in more than four decades. Employers created 215,000 jobs in March, whereas the unemployment rate edged up to 5%, but the rise partly reflected more workers entering the labour force.
Fed officials will likely consider the relative health of the labour market at next week's policy meeting. However recently, policy makers have voiced their concerns about weakness in the global economy and are watching inflation readings and wage gains closely. A large majority of economists expect the Fed to hold its benchmark interest rate steady at the meeting.
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 Markit Manufacturing PMI is the only event today
Friday is quiet in terms of economic data releases, with only one event to influence the USD/JPY pair scheduled for today, namely the US Markit Manufacturing PMI. The Manufacturing Purchasing Managers Index (PMI) is released by the Markit Economics and which captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic conditions in the United States. Readings above 50 imply the economy is expanding, making investors understood it as a bullish for the USD, whereas a result below 50 points for an economic contraction, and weighs negatively on the currency.USD/JPY continues climbing higher
Yesterday the Japanese Yen managed to outperform the US Dollar for the first time this week, as falling oil prices sparked buying of major Yen crosses. The Greenback, however, remains strong and is expected to edge higher again today, after the Japanese Markit Manufacturing PMI weakened the Japanese currency. Even though technical indicators keep giving bearish signals, the USD/JPY currency pair has been in an up-trend ever since the 18-month low was put to the test two weeks ago. The nearest area to limit the gains rests around 110.00 level, represented by the weekly R1 and the 20-day SMA, but the second target, namely the monthly S1 and the weekly R2, is also reachable.Daily chart
Even though the newly-formed resistance line received an extra confirmation on Thursday, bulls pushed the USD/JPY currency pair significantly higher on Friday, causing the trend-line to be breached. The breach indicates the pair's ability to keep appreciating towards a larger scale down-trend above the 112.00 major level.
Hourly chart
Bulls remain in control
Bulls also dominate the OANDA market, where 64% of open positions are long, compared to 63% on Thursday. The sentiment as reported by SAXO Bank remains bullish - 55% of currently open positions are long, compared to 58% on Thursday.
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 (61%) 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 (29%) of the voters. According to the votes collected between March 22 and April 22, the mean forecast for July 22 is 113.12. At the same time, 14% of the surveyed believe the Greenback could cost between 115.50 and 117.00 yen in three months.
Meanwhile, 63% of Dukascopy Community members still think that pair will continue its bearish development. Slightly more than 26% of traders expect the pair to close above the 108.5 level at the end of the present working week, while the average expectation stays just below this level, which is supported both by weekly pivot point and daily S1 support line.
According to megajorko, the USD/JPY is likely to appreciate by the end of the week, as he still expects the pair to reach a round number. "There are no news which could strengthen the yen. However, I think that trend is bearish in a long term", he commented.
At the same time, another trader with the Dukascopy Community under the nickname Pisaklanos believes that the USD/JPY pair might remain relatively unchanged. "It seems the BOJ resigned to the idea of a stronger yen, even besides the "adding stimulus" narrative. No action observed during the week to fend off the appreciation of the yen. My outlook is rather neutral than bearish or bullish", he backed his view.