- 55% of all pending orders are to acquire the US Dollar
- 60% of traders hold short positions
- The nearest resistance is at 111.75
- Immediate support rests around 111.30
- Upcoming events: Markit Services PMI, Markit Manufacturing PMI, US New Home Sales
The number of Americans filing for unemployment benefits dropped unexpectedly last month, official figures revealed on Thursday. The US Department of Labour reported that initial jobless claims fell to 232K in the week ending May 12, following the preceding week's 236K and posting the third consecutive decline. In the meantime, analysts held expectations for an increase to 240K. Claims remained below the 300K level for 115 straight weeks, the longest stretch since 1973.
The number of continuous claims fell 22K to 1.90M during the week ended May 5, the lowest since November 1988. Back in April, US private companies created 211K jobs, roughly meeting analysts' expectations. Other data released on Thursday showed that manufacturing activity in Philadelphia jumped to 38.8 points in May, up from the preceding month's 22.0, whereas analysts anticipated a slight decrease to 19.9. More than half of market participants expect the Federal Reserve to raise rates next month. However, uncertainties tied to the US President Donald Trump and Russia may lower significantly the chances of a June rate hike.
US New Home Sales, Markit Services and Manufacturing PMIs
Today's attention turns to the US fundamentals, such as the Markit Services and Manufacturing PMIs, as well as the New Home Sales. The Markit Manufacturing PMI captures business conditions in the manufacturing sector; as the manufacturing sector dominates a large part of total GDP, the given PMI is an important indicator of business conditions and the overall economic condition in the US. As for the Services PMI, it captures business conditions in the services sector, which also dominates a large part of total GDP and, therefore, is an important indicator. The New Home Sales is an important measure of housing market conditions. House buyers spend money on furnishing and financing their homes, so as a result, the demand for goods, services and the employees is stimulated.
USD/JPY stuck between 110.50 and 111.75
The USD/JPY pair has been trading rather calmly since last week's sharp decline, managing to retain its positions above the 111.00 major level. The given pair now appears to be contained within a specific trading range, with the 55-day SMA and the weekly PP representing the upper border, and the monthly PP with the lower Bollinger band—the lower one. Additionally, strong demand rests around the 110.00 mark, which should limit any deeper losses should the immediate support fail. Meanwhile, technical indicators imply the Greenback is to outperform the Yen again, but due to lack of impetus the nearest resistance is likely to remain intact today.Daily chart
On the hourly chart the pair breached the broadening rising wedge's support line, thus, creating higher downside risks. A failure to rebound this week is likely to result in another slump, with the 110.00 major level getting violated.
Hourly chart
There are 60% of traders holding short positions, while 55% of all pending orders are to acquire the US Dollar.
At the moment, 52% of OANDA clients are long the US Dollar against the Yen, while the remaining 48% are short. In addition, Saxo Bank clients' sentiment slightly worsened over the day, as 59% of their open positions are now long, compared to 60% yesterday.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between April 23 and May 23, traders expect the US Dollar to appreciate to 112.01 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 59% of all forecasts fall above 111 yen, which is still below the current spot price. The majority of people who voted expect the US Dollar to cost somewhere either between 112.50 and 114.00 yen, or between 115.50 and 117.00 yen in three months, with 17% of survey participants choosing each of these trading ranges. Furthermore, the 105.00-106.50 and the 114.00-115.50 ranges were the second most popular ones, with 13% of the voters choosing each of them.