- The share of buy orders slid from 67 to 54%
- 56% of traders hold long positions
- Immediate resistance lies around 115.28
- The closest support rests around 114.40
- Upcoming events: US Average Hourly Earnings, US Non-Farm Payrolls, US Unemployment Rate, UK NIESR GDP Estimate, US Federal Budget Balance
The US private sector created more than expected jobs last month, surprising markets. The ADP National Employment Report released on Wednesday showed companies added 298,000 new jobs to the economy in February, while analysts expected a gain of 184,000 jobs. The report also showed that January's initially reported gain of 246,000 jobs was revised up to 261,000. Wednesday's stronger-than-expected ADP figures provided support to the US Dollar on hopes that Friday's NFP would surprise on the upside. After the release, the EUR/USD pair fell to 102.00, while the US Dollar Index advanced to 101.80. Markets expect Friday's NFP data to show a rise of 185,000 for February, compared to the preceding month's gain of 227,000. If the actual data comes in higher than economists' estimates, it would provide additional support for Fed officials to raise rates at their meeting next week.
According to market consensus, the unemployment rate slowed down to 4.7% in February from the previous month's 4.8%. Other data release on Wednesday showed US crude oil inventories rose 8.2 million in the week ended March 3, compared to the prior week's gain of 1.5 million barrels, while market analysts anticipated a climb of 1.1 million barrels during the reported week.
US NFP is the most anticipated event
Today all eyes are on the US Non-Farm Payrolls and other relevant data. The Non-Farm Payrolls present the number of new jobs created during the previous month in all non-agricultural businesses. 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. Generally speaking, a high reading is seen as positive for the USD, while a low reading is seen as negative, although previous months' reviews and the unemployment rate are as relevant as the headline figure, and therefore market's reaction depends on how the market assets them all. Another important event will be the US 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 unemployment and willing to work. Usually, a high rate is seen in recessionary economies, while on the contrary, a growing economy sees its unemployment rate decreasing. Therefore, a decrease of the figure is seen as positive for the USD, while an increase is seen as negative, although by itself the number cannot determine the markets move, as it depends on the headline reading – the Non-Farm Payrolls. Furthermore, the Average Hourly Earnings are due. They are a significant indicator of labor cost inflation and of the tightness of labor markets. The Federal Reserve Board pays close attention to when setting interest rates.USD/JPY sets eye on 116.00
For the third consecutive day on Wednesday the US Dollar outperformed the Japanese Yen. The Buck itself overperformed, which caused the ascending channel's resistance line to be pierced. Consequently, the 115.00 mark was put to the test, but managed to contain the USD/JPY pair for the time being. However, a breach today is more than possible, as the upcoming NFP data is probably the most anticipated in comparison to all the readings in the last couple of years, as it would indicate whether Fed is to raise rates next week. A positive reading is to boost the Buck and could even push it beyond 116.00, while a disappointment might lead to a drop back to 113.00.Daily chart
Both on the daily and the hourly charts the respective trend-lines were pierced to the upside yesterday, suggesting that more bullish momentum is likely to follow. The USD/JPY pair's main goal is still the down-trend near 117.00, which could be reached in less than a week if today's NFP data provides a significant boost and ensures the rate hike on Wednesday will occur.
Hourly chart
There are 56% of traders holding long positions today (previously 55%), whereas the share of buy orders slid from 67 to 54%.
Right now 52% of OANDA clients are bulls, compared to 54% on Thursday. In the meantime, Saxo Bank clients retain a positive outlook towards the US Dollar, being that 55% of their open positions are now long and the remaining 45% 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 10 and March 10, traders expect the US Dollar to appreciate to 114.41 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 60% 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 interval was the 106.50-108.00 one, with 16% of survey participants choosing it.