- The portion of buy orders edged down from 56 to 49%
- There are 74% of traders being long the Buck
- The weekly R2 at 108.70 represents immediate resistance
- Support is around 108.39
- 54% of the survey participants expect the US Dollar to cost more than 114 yen in three months
- Upcoming events: US Jobless Claims, US Import Prices, FOMC Members George and Rosengren Speeches
The US Dollar's performance on Thursday was rather poor, as the Buck declined against most major peers that day. The largest losses of 0.89% and 0.79% were registered against the Kiwi and the Yen, respectively. At the same time, the American Dollar edged 0.51% lower versus the Swiss Franc, 0.47% against the Euro and 0.44% versus the Loonie. Against the third commodity currency, the Aussie, the Greenback suffered only a 0.16% decline, while the Cable edged 0.01% higher.
American employers posted the most open jobs in eight months in March, but total hiring slowed, sending mixed signals of the labour market. Job openings rose 2.7% to 5.76 million, the most since July, the Labor Department reported. That may suggest better hiring in the coming months. Yet hiring slowed to 5.3 million from 5.5 million. That indicates employers became more reluctant to fill open positions, due to slower economic growth from October through March. The decline in hiring echoes a pullback that was reported last week, when the official data showed net hiring slowed in April. Yet the increase in job openings suggests that job gains could pick up again in the coming months. 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 Jobless Claims and US Import Price Index
Among important economic data releases, there are two events to have some impact on the USD, such as the US Jobless Claims and the Import Prices. The Initial Jobless Claims are a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labor market. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy. The US Import Price Index informs the changes in the price of imported products into the US. The higher the cost of imported goods, the stronger the effect they will have on inflation, redunding in a higher probability of a rate rise.USD/JPY keeps approaching 110.00 mark
Risk aversion drove the USD/JPY lower on Wednesday, with the pair almost completely erasing Tuesday's gains and the monthly PP limiting the losses. The monthly PP at 108.39 is providing solid support and is expected to cause a rebound, pushing the US Dollar beyond the immediate resistance, represented by the weekly R2 and the 20-day SMA around 109.70. Moreover, the pair has formed a falling wedge pattern, thus, the possibility of a bullish development is higher. The pattern's upper border, however, is the main target, located at 109.77 and bolstered by the weekly R3. Meanwhile, technical indicators are unable to confirm the bullish scenario.Daily chart
The USD/JPY pair remains in a short-term bullish trend, with the exchange rate slowly approaching the resistance trend-line around 109.50. From that point, the bearish momentum is likely to prevail, unless some impetus causes the bulls to push the US Dollar over the ledge.
Hourly chart
Bulls remain in control
Bulls also dominate the OANDA market, where 62% of open positions are long, eight percentage points less from Tuesday. Meanwhile, the sentiment as reported by SAXO Bank remains bullish at 55%, 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 (54%) 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 (31%) of the voters. According to the votes collected between April 12 and May 12, the mean forecast for August 12 is 111.73. At the same time, 20% of the surveyed believe the Greenback could cost between 115.50 and 117.00 yen in three months.
Compared to the previous week the bullish sentiment gained even more strength, as two thirds of all votes are now set to acquire the American currency versus the Yen. As a result, the average forecast for the pair for the end of this week went up to 107.
Megajorko believes that the USD/JPY could end the week higher. He commented that "After the strong drop in the pair there will surely be a correction. A little information is still given about future Japanese stimulus program and if there are new rumors of returning to bond purchase I think the pair will go again up."
Meanwhile, Jognesh is bearish on the USD/JPY, suggesting that the equity market continues it's bearish cycle globally. "During down trends in equities, we tend to see stronger correlations with JPY which is what we have seen as of late. As well, the BOJ has not given the market much of a reason to continue selling the JPY, and so we can see the pair continue to drift lower," he shared his opinion.