- The share of buy orders edged up from 44 to 59%
- 61% of all open positions are long
- The weekly R3 at 105.07 represents immediate resistance
- Support is around 104.15
- 61% of the survey participants expect the US Dollar to cost less than 108.00 yen in three months
- Upcoming events: US PPI and Core PPI, US Jobless Claims
The U.S. labour market continued to slow in June but at a more moderate pace as the economy moved closer to full employment, according to an index prepared by the Federal Reserve. The US labour market conditions index registered a 1.9 decline for June from after a revised drop of 3.6 the previous month. This was the sixth successive decline and also a slightly larger than expected decline for the month, maintaining the generally disappointing trend seen for 2016 as a whole. The data could suggest an imminent turning point, but further evidence will be needed to convince markets of a sustained improvement despite the bumper payrolls release last Friday.
The LMCI is a broad composite index of 19 labour-market indicators and it watched closely by the Federal Reserve with Chair Janet Yellen instrumental in setting up the index. The Fed introduced the index in 2014 as a way to measure the labour market's momentum. Moreover, Fed officials have touted the LMCI as a more comprehensive view of the labour market than the one provided by individual data releases from the Department of Labour and other agencies.
Vatsal Srivastava, director at the Blackwater Consulting, explained why the US Dollar advanced against the Yen last week. He said there was nothing fundamentally driving USD/JPY on Monday, but one of the key drivers was the falling oil prices, which was actually boosting the Yen; in analyst's opinion, as there was an addition cause for more QQE. Vatsal Srivastava also mentioned 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 summed up.
US PPI and Initial Jobless Claims
Once again all attention is to be paid to the US fundamentals, such as the PPI. It 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. Furthermore, the US Jobless Claims are to be released later today, which measure 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.USD/JPY remains on the back foot
Neither the immediate resistance nor the support areas were pierced yesterday, with the Greenback ultimately remaining relatively unchanged against the Yen. Although the Buck failed to make a solid U-turn, more bearish momentum could still follow today, as the overall trend remains bearish until the key resistance area around 109.00 is breached. Meanwhile, technical indicators are giving bearish signals, also suggesting the USD/JPY currency pair is to suffer a loss today. The main target below currently is the 20-day SMA around 103.14, but it is uncertain whether there is sufficient impetus for a strong decline below 114.00.Daily chart
The USD/JPY currency pair experienced a small setback on Wednesday, as it was unable to post more gains. However, the exchange rate appears to be steadily holding above the 104.00 major level, thus, there is a solid chance the 38.20% Fibo at 106.65 will be reached during the day.
Hourly chart
Bulls keep losing numbers, as 61% of all open positions are now long (previously 63%). The share of buy orders edged up from 44 to 59%.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 61% of positions opened by its clients are long. Similarly, 56% of positions opened by Saxo Bank traders are long as well, compared to 66% on Wednesday.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to fall below 108.00 yen
Slightly more than half of the surveyed (61%) now assume that the US Dollar is to cost less than 108.00 yen after three month time. The most popular choice, however, implies that the Greenback is to cost between 108.00 and 109.50 yen in three months, selected by 20% of the voters. According to the votes collected between June 14 and July 14, the mean forecast for Oct 14 is 105.77. At the same time, 13% of the surveyed believe the Greenback could cost either between 100.50 and 102.00 or between 106.50 and 108.00 yen in three months.