- 52% of all pending orders are to sell the US Dollar
- 55% of traders hold long positions
- Immediate resistance lies around 115.15
- The closest support rests around 114.50
- Upcoming events: US Labor Market Conditions Index, US PPI and Core PPI
The US private sector created more jobs than expected last month, providing support for a Fed interest rate hike on Wednesday. The Bureau of Labor Statistics reported on Friday that nonfarm payrolls rose 235,000 in February, while analysts expected nonfarm employment to climb 196,000 in the reported month. Meanwhile, January's gain of 227,000 was revised up to 238,000. The construction sector contributed most to the February gain, adding 58,000 jobs. Over the past six months, the sector created an average of 177,000 jobs per month Data also showed average hourly earnings advanced 0.2%, falling behind analysts' expectations for a 0.3% increase. January's rise of 0.1% was revised up to 0.1%. The jobless rate came in at 4.7% for February, marginally down from the prior month's 4.8% and in line with market forecasts.
Over the past three months, the US private sector added an average of 209,000 jobs per month. The better-than-expected NFP report combined with rising inflation are likely to force the Federal Reserve to raise rates for the first time this year on Wednesday, during its policy meeting. Back in December 2016, the Central bank projected at least three rate hikes in 2017. Analysts suggest that the US labour market is at or close to full employment.
US PPI and Core PPI are due on Tuesday
On Monday there are no events of great significant that could have a solid impact on the USD/JPY pair, but on Tuesday traders can focus on the US PPI and Core PPI. The PPI measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation. In the Core PPI, however, volatile products, such as food and energy, are excluded in order to capture a more accurate calculation.USD/JPY begins sliding down
The Greenback failed to appreciate against the Japanese Yen on Friday, therefore, preserving the ascending channel's resistance line. The pair failed to reclaim the 115.00 major level, which suggests a possible retest of the channel's lower boundary within the next two weeks. Today the Buck is expected to weaken against the Yen, as the bearish momentum persists from the disappointment of Friday's earnings growth data. However, due to lack of any other market movers, the given pair could retain its position above the immediate demand area, namely the monthly R1 and the weekly PP around 114.63. Any slide further down is to be limited by the 55-day SMA circa 114.28.Daily chart
The situation on the hourly chart gradually differs from the one on the daily chart. Even though the exchange rate began sliding down, the 200-hour SMA could still limit the losses and prevent the pair from eventually retesting the channel's lower boundary. Moreover, the 23.60% Fibo just on top of the 114.00 major level remains a valid support.
Hourly chart
There are 55% of traders holding long positions today (previously 56%), while 52% of all pending orders are to sell the US Dollar.
Right now 51% of OANDA clients are bulls, compared to 52% on Friday. In the meantime, Saxo Bank clients retain a positive outlook towards the US Dollar, being that 58% of their open positions are now long and the remaining 42% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between February 13 and March 13, traders expect the US Dollar to appreciate to 114.78 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 63% of all forecasts fall above 114 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 114.00 and 115.50 yen in three months, with 17% of the survey participants choosing this trading range. At the same time, the second most popular intervals were the 106.50-108.00 and the 118.50-120.00 ones, with 15% of survey participants choosing each of them.