- The share of buy orders surged from 30 to 59%
- 55% of all open positions are short
- The nearest resistance is at 111.44
- Immediate support rests at 111.27
- Upcoming events: US Average Hourly Earnings, US Non-Farm Employment Change, US Unemployment Rate, US Trade Balance
US private companies created more than expected jobs last month, official figures showed on Thursday. The ADP National Employment Report revealed that the US private sector added 253K new jobs to the economy in May, compared to the preceding month's downwardly revised gain of 174K positions. Meanwhile, analysts expected private firms to create 181K new jobs during the reported month. The Moody's Analytics Chief Economist Mark Zandi said that wage growth would likely accelerate "through the year into 2018" amid the tightening labour market. Strong job creation is expected to comfy the Federal Reserve and force it to raise interest rates further in the upcoming months. The ADP data come ahead of the Labour Department's non-farm payrolls report, scheduled to be released on Friday.
According to analysts, both US private and public sector created 181K new jobs last month, following April's gain of 211K new positions. Moreover, the jobless rate is set to come in at 4.4% for May, unchanged from the previous month. Economists suggest that the US labour market is close to or at full employment.
US NFP is the main event today
The long-anticipated US NFP data is due today. The Non-Farm Payrolls present the number of new jobs created during the previous month in all non-agricultural business. The monthly changes in payrolls can be extremely volatile, due to its high relation with economic policy decisions made by the Central Bank. The number is also subject to strong reviews in the upcoming months and those reviews also tend to trigger volatility in the forex board. However, previous months' reviews and the unemployment rate are as relevant as the headline figure, therefore, market's reaction depends on how the market assets them all. As for the Unemployment Rate, it is a percentage that surges from dividing the number of unemployed workers by the total civilian labor force. It represents the percentage of people actively seeking employment and willing to work. Usually, a higher rate is seen in recessionary economies, while on the contrary, a growing economy sees its unemployment rate decreasing. Nevertheless, by itself the number can't determine the market's move as it depends in the headline reading – the NFP.
USD/JPY edges higher ahead of US NFP
Even though the Greenback outperformed the Yen yesterday, it was still unable to close above the 111.40 mark, but still partially broke through the immediate resistance. Upbeat ADP data triggered the rally, with the NFP now anticipated to strengthen the US Dollar even further. The highest level is expected to be the 112.30 one, where the 100-day SMA rests, assuming other resistances on the path fail to contain the gains. Meanwhile, technical indicators keep giving bearish signals, insisting that the Buck is to edge lower and pierce the 110.75 psychological support area, leaving the 200-day SMA at 110.33 as the next target.Daily chart
With the breach of the three-week down-trend, the USD/JPY pair now has the opportunity to post more gains, especially since there are no solid obstacles on its path towards 114.00. Despite this, the market should be ready for any surprises the fundamental data could bring, as its effect could be extremely negative for the US Dollar.
Hourly chart
Traders' sentiment remains bearish, with 55% of all open positions now being short. The share of buy orders surged from 30 to 59%.
At the moment, 61% of OANDA clients are long the US Dollar against the Yen, while the remaining 39% are short. In addition, Saxo Bank clients' sentiment slightly worsened over the day, as 57% of their open positions are now long.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between May 02 and June 02, traders expect the US Dollar to appreciate to 112.57 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 111 yen, which is above the current spot price. The majority of people who voted expect the US Dollar to cost somewhere either between 112.50 and 114.00 or between 115.50 and 117.00 yen in three months, with 18% of survey participants choosing each of these trading ranges. Furthermore, the 105.00-106.50 range was the second most popular one, with 14% of the voters choosing it.