- Advantage of sell orders over the buy ones was reduced from 14 percentage points to naught
- Long positions still dominate the market with a 64% share
- Strong support at 103 yen
- If 103 holds, the target will be at 105.30
- 61% of the survey participants expect the US Dollar to cost less than 105.00 yen in three months
- Upcoming events on Tuesday: US ISM Non-Manufacturing PMI
Fewer jobs were created than expected in the United States last month, official data revealed on Friday. According to the Labor Department, total nonfarm payroll employment in the country jumped 151,000 in August, following July's upwardly revised gain of 275,000, whereas market analysts expected the economy to add 180,000 new jobs in the reported month. Over the past three months, job gains averaged 232,000, compared with 182,000 for the first eight months of 2016. Furthermore, average hourly earnings advanced 0.1%, down from July's 0.3%, while the average workweek dropped to 34.3 hours in the same month from July's 34.4, leading to a 0.2% decline in the index of aggregate weekly hours. Over the past month, job growth in construction and manufacturing was weak, while strong in retail, healthcare, leisure, and government sectors.
The headline unemployment rate remained unchanged at 4.9%, whereas economic desks anticipated a slight deceleration to 4.8% during the reported period. Average hourly earnings held steady at 2.4% in the same month. On Wednesday, payroll processor ADP said US companies created 177,000 new jobs in August, slightly surpassing the 174,000 market forecast. The report put into question the possibility of an interest rate increase by the Federal Reserve at its September meeting.
Activity to stay decreased until Tuesday
Today there are hardly any reasons for USD/JPY to move after Haruhiko Kuroda failed to reinforce easing expectations. US banks will be closed due to Labour Day, and there are no important releases scheduled in Japan until the end of the day. There will be more reasons for volatility to rise tomorrow, when US Services PMI are expected to show expansion of the sector at nearly the same pace as month ago - 55.4 after 55.5 for July.USD/JPY ready to rebound from 103 yen
The current setup is bullish for USD/JPY, as the currency pair has broken out of the descending channel that had been guiding the price lower since the end of 2015. However, we would like to wait for a confirmation of support at 103 yen before claiming that Dollar is going to appreciate, as fundamentals have not been supportive of USD/JPY rally lately. Once 103 is established as a solid demand area, our target will be the 100-day SMA at 105.30, followed by the July high at 107.50. Alternatively, the rate will likely slide down to 100 yen.Daily chart
In the hourly chart USD/JPY failed to stay within the ascending channel after a test of 104.20, although this had more to do with the fundamentals. Nevertheless, this puts significant downward pressure on the recently broken trendline at 103.20/00, which must stay intact in order for the outlook to remain positive. Otherwise we may expect a rapid decline to the 200-hour SMA at 102.20.
Hourly chart
Traders have become somewhat less bullish the US Dollar, but long positions still dominate the market with a 64% share. In the meantime, advantage of sell orders over the buy ones was reduced from 14 percentage points to naught.
Sentiment is bullish elsewhere, but to a lesser extent. For example, 58% (63% last Friday) of positions open at OANDA are long, and 57% (66% last Friday) of positions open at Saxo Bank are long as well.
Spreads (avg, pip) / Trading volume / Volatility
More than a half expect the exchange rate to fall below 105.00 yen
Slightly more than half of the surveyed (61%) now assume that the US Dollar is to cost less than 105.00 yen after a 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 17% of the voters. According to the votes collected between Aug 02 and Sep 02, the mean forecast for December 02 is 103.43. At the same time, 13% of the surveyed believe the Greenback could cost either between 103.50 and 105.00 yen or even more than 109.50 yen in three months.