- Buy orders now take up 66% of the market
- 60% of all positions are long
- 19% of traders expect the US Dollar to cost between 123.00 and 124.50 yen in three months
- The closest support lies around 119.64, namely the weekly and monthly PPs, while the nearest resistance is located around 119.91, represented by 55-day SMA
- Upcoming events: US Non-Farm Payrolls, US Unemployment Rate, US Average Hourly Earnings, FOMC Member Dudley Speech
The number of Americans applying for unemployment benefits rose slightly in the week ended May 2 after falling to the lowest level in 15 years, but the level remains consistent with improving labour market. Initial jobless claims, a proxy for layoffs across the American economy, increased by 3,000 to a seasonally adjusted 265,000 last week, according to the Labor Department. The level of claims for the prior week remained unrevised at 262,000, and was the lowest since April 2000. The four-week moving average for initial claims declined by 4,250 last week to 279,500. That was also the lowest average since May 2000. The report showed the number of continuing claims for unemployment benefits dropped by 28,000 to 2.23 million in the week ended April 25. That was the lowest level since November 2000.
Investors' attention now turns to US labour market data later today, following a dismal ADP's report earlier in the week. US private employers added 169,000 jobs last month, the fewest since January 2014 and considerably below economists' expectations. Market expectations stand for a decline in the nation's jobless rate to 5.4%, as non-farm employment is seen rising by 227,000. If payroll gains fail to accelerate, that might present a concern for Federal Reserve policy makers.
Stephen Pope, a managing partner, gives his opinion about the current situation concerning the Bank of Japan. He says that if you want to find any shock revelations about what the BoJ are up to, one actually has to start digging quite deeply into the data. Stephen comments that the data a lot of data mining is required, because at the current time it is uncertain whether the Abenomics, the Three Arrows, are really working. He also adds that "there has been a lot of pressure from the Government on the BoJ to be a heavy intervention machine, so almost sacrificing their independence in order of making Abenomics work and pushing Japan forward."
Craig Erlam, Senior Market Analyst at OANDA, commenting on the prospects of the Fed raising interest rates this year, said that there is no real difference between the Fed raising rates either in June or in September. In his opinion September just seems more likely, because it gives the Fed more time to prepare for the hike. Craig also does not see the immediate necessity for a rate hike in September, but thinks that "there is just a number of policymakers who want to test the water with the first hike, see how the markets react, how economy holds up."
US Non-Farm Payrolls
The US Non-Farm Payrolls are expected to show strong data. Moreover, the unemployment rate in the US is likely to fall a bit. As a result, the US fundamentals should strengthen the Greenback further, forcing it to appreciate against the Yen.
Marcel Thieliant, economist from Capital Economics, forecasts USD/JPY to be at 130.00 by the end of the second quarter. The analyst commented that he expects the BoJ to step up the pace of easing at the end of this month. "This is obviously not what other economists expect, if that happens, we will probably see a strong drop in the Yen against the Dollar and against other major currencies" - he said.
USD/JPY rushes over 120 again
The USD/JPY pair managed to rebound on Thursday, amid better-than-expected US fundamental data. Ultimately, the 20-day SMA caused the bullish momentum to be regained, but the resistance cluster around 119.60 failed to stop the rally, although Wednesday's losses were not erased. Today the Greenback is likely to strengthen again, and the 120 level to be crossed. The closest resistance after that rests around 120.38, namely the Bollinger band, while technical studies are now showing bullish signs.
Daily chart
Without reaching the 119 psychological level, the USD/JPY managed to bounce back earlier than anticipated. A substantial surge took place, amid good Jobless Claims figures. The 200-hour SMA was easily pierced, but the 120 level is yet to be reached. Growth continues today and the pair edges closer to the 120 major level, perhaps, even the weekly high will be reached again.
Hourly chart
More bullish traders emerge
More traders have a positive outlook towards the Buck today, as 60% of all positions are long. The portion of buy orders dropped one percentage point, as they now take up 66% of the market.
Market sentiment of OANDA Group improved further, as 64% of traders are now long the Buck. Meanwhile, SAXO Group traders' outlook towards the Greenback also gained some ground, as the 76% of all positions are long.
Spreads (avg, pip) / Trading volume / Volatility
19% of traders expect the US Dollar to cost between 123.00 and 124.50 yen in three months
The mean forecast for August 8 is 121.24. The vast majority of the survey participants (65%) expect the US Dollar to cost more than 120 yen. The most popular price interval is divided 123.00 and 124.50 yen, selected by 19% of traders. The second popular price range, 121.50-123.00, chosen by 15% of the surveyed.
While closing on a positive note at the 120.20 level on Friday, the pair is estimated to calm slightly down this week, possibly falling back below 120 but remaining largely inactive. Still, the majority of Dukascopy Community members prefer a positive case for the Greenback, namely in two thirds of all the cases.
Tommaso, a trader with a bullish outlook towards the USD/JPY currency pair, says that the Yen has been strongly devaluing from July 2014 to November 2014. Tommaso also mentioned that "there has been a period of "controlled" oscillations of the pair, but it seems that the poor results obtained require another step of devaluation. His prospect is that the pair could reach the quite 121 steadily during this week. At the same time, Gereltod, another community member, assumes the USD/JPY is forming a wedge and that it will breakout the formation on the bearish side, or that it could continue ranging by bouncing off a support level at 118.50. Nevertheless, Gereltod mentioned that "even if it bounces off the support level, I believe the pair will plunge through it eventually".