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  1. #1
    Specialist Member RCox's Avatar

    Hot Non Farm Payrolls to Determine Next Move in Currencies !!!

    Non Farm Payrolls to Determine Next Move in Currencies

    Market sentiment today will depend heavily on the outcome this month's Non Farm Payrolls data, and its accompanying unemployment rate. These numbers are expected to show that the US economy added 165,000 new jobs last month (which would be a small uptick from the previous month), with a unemployment rate that holds steady at 7.8%. There is some potential for a positive surprise here, as Wednesday's ADP employment report (a measure of jobs increases in the private sector) was very positive and showed an addition of 192,000 jobs last month. These reports have a high historical correlation but if we do see a downside surprise, the move could be larger because of the built up expectations created by the ADP report.

    To play this information, traders should look at the EUR/JPY, which is a good indicator of risk sentiment in the market. A positive NFP number will likely send prices through 1.2590, where hourly CALL options can be taken. If the number is negative, watch for a break of 1.2560, which is where hourly PUT options can be taken in EUR/JPY. Market reactions to the NFPs tend to be volatile, and this means that time frames that are less than 1 hour can be considered.

  2. #2
    Solid Member Peter Green's Avatar
    The NFP number was worse than expected only 157 less than previous month, which was changed to around 190. I am totally confused how the US30 jump so straight up after worse than expected data???

  3. #3
    Legendry Member Michael Hodges's Avatar
    What the non farm payrolls means is that the economy is not improving enough for the Fed to cease its $85 billion asset purchase plan. This fiscal stimulus is one of the underlying fundamental factors driving currency trades, especially usd pairs. To see the USD strengthen against the Euro we need to see economic improvement in the form of jobs growth/gdp growth. The EUR/JPY pair has other fundamentals driving it, the Euro is strengthening against the dollar while the yen is weakening, this should correlate into a stronger eur/jpy trade but I will defer to Richard on this...

  4. #4
    Rookie Member
    Really a big surprise, but I think sometimes the market react as it was predefined not the way the news dictate!

  5. #5
    Legendry Member Michael Hodges's Avatar
    Quote Originally Posted by bronks View Post
    Really a big surprise, but I think sometimes the market react as it was predefined not the way the news dictate!
    There was definatelyl some expectations and it did seem as if the trading was based on that, at least the futures trade. Lets see how the markets open and where they end today.

  6. #6
    Specialist Member RCox's Avatar
    The 157,000 jobs increase was slightly less than expected and this was more of a surprise given that the previous jobs data was strong. Unemployment also ticked higher, and this is weighing on risk currencies. I don't agree with the points that this suggests stimulus and the general recovery is not working. The US economy needs to create 150,000 jobs each month to keep up with population increases, and this does meet that criteria. This might be enough to keep stocks from showing major declines today. Overall, its not a bad number, just slightly less than the built up expectations.

    Market reaction in EUR/JPY following the number:

    Click image for larger version. 

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  7. #7
    Active Member
    The stimulus program I also think works well, but after such a big payout it still looks like US economy is far from full recovery and there is no way to move away from that situation. The risk of currency wars is also big and the risk of unstoppable inflation is also big..

  8. #8
    Specialist Member RCox's Avatar
    Quote Originally Posted by stovedude View Post
    The stimulus program I also think works well, but after such a big payout it still looks like US economy is far from full recovery and there is no way to move away from that situation. The risk of currency wars is also big and the risk of unstoppable inflation is also big..
    Time to start hoarding canned goods?

  9. #9
    Senior Member Grae's Avatar
    Very dramatic week on this currency. -ve GDP on Wednesday set the pace for a bullish EUR

  10. #10
    Veteran Member uj.forex's Avatar
    I normally trade 5 minute strategy in NFP... but for the past 3 months, it is not working... Sheer manipulation is being done in NFP now.... Too dodgy...

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