Henry Liu
Former FPA Special Consultant
- Messages
- 473
We’ll be trading the US NFP (Nonfarm Payroll) Employment Changes, it is the focus news release for the week. Here’s the forecast:
8:30am (NY Time) US NFP Forecast 140K Previous 103K
8:30am (NY Time) US Unemployment Rate Forecast 9.5% Previous 9.4%
ACTION: 210K BUY USDJPY / 70K BUY EURUSD
The Trade Plan
With today’s release, as per a special report by Bloomberg, the medium expectation is around 140K, with an estimated increase in the private sector payrolls at +145K. Market has shifted up its sentiment towards private sector jobs after this week's slew of positive PMI figures and Wednesday's ADP report...
The Unemployment Rate will be another important figure today as it is expected to increase slightly from 9.4% to 9.5%. If you remember, last Unemployment came out at 9.4%, which is probably a result of Jobless Claims filing decrease due to end of year holidays... Therefore, even if we get 9.6% or 9.7% of Unemployment Rate, market would probably not react with extreme volatility... However, if the Unemployment rate is above the psychological 10.0% level, then expect heavy USD sell-offs.
The Plan
Here's the general plan: If we get a significantly lower release on the NFP (70K or worse) and Unemployment Rate (9.7% or worse), I’d be looking to SELL USDJPY, SELL GBPJPY, BUY EURUSD, BUY GBPUSD on a retracement.
On the other hand, if we get a positive NFP release (+210K or better) and the Unemployment Rate remains at 9.5% or better, JPY should weaken immediately as USD/JPY may recover and move above 83 to 84 throughout the trading session... I will be looking to BUY USDJPY, BUY USDCHF, BUY USDCAD.
If we get a conflict release, we will wait and see how the market reacts first. If there is an overwhelming sentiment driving the market, there will be plenty of opportunities for entry. If you just wait for 5 minutes before making an entry, you’ll get a much clearer view.
Please read my detailed trading strategy for this release below…
The Market
Market has been trading with renewed optimism for the EUR as a resolution to the debt crisis is just around the corner... Therefore for the better part of the 2011, we've seen USD under considerable pressure; however, if we get a significant improvement in today's releases, USD could be mounting a major rally as most European majors are at strong resistance levels.
As usual, this release is probably going to define the general direction for the USD for the rest of the month... With yesterday's Trichet Press Conference ended with some disappointment in the Euro, a strong contrast in today's figure will change the short-term trend. However, if we get an inline or worse than expected number, EURUSD will definitely recover and retest 1.3850 levels...
Important Note: I believe the general market will be focused more on the Private Sector jobs, which are expected at a +145K. If we get a strong number, let's say in the range of 200K+, even if the NFP headline is inline or slightly less than expected, traders should have no problem in going LONG on USD.
NFP Trading Strategy
Below is a general guideline on how to trade NFP release. This is what I do with EVERY NFP release.
Let’s talk about how to trade this release: We’ll wait for the numbers to come out, but will not take any trade YET, even if we get our tradable figures (210K or 70K). We’ll wait for a possible revision to the previous release number, 1which is 103K, as the market usually overreacts with the Revision and chances favor for this trade to work out if we do not get conflicting releases between the revision and the actual release; at this point, still stay out of the market.
Then the next step is to wait for the Unemployment Rate, which is expected to be at 9.5% from 9.4% prior. If the Unemployment Rate were to surprise higher, we’ll have to really make an executive decision at the time of the release and see what is the primary focus of the market. Remember that the significant improvement last month (0.3%) was due to seasonal factors, therefore market should not react much even if we get 9.6% or so... As long as we don’t go over the 10.0% psychological level, I think traders may not even focus on this release.
After all of the numbers have been released. Wait for the market to push… then be patient and wait for a decent retracement before getting in. Look for recent support/resistance areas for entry as a high impact news with various components are extremely volatile, and those who are patient will always get a chance to enter with much better entry.
Additional Thoughts
With EURUSD hovering around the 1.3600 and AUDUSD just hovering the 1.0200 level, on a stronger NFP release, we could see significant losses in both pairs.
Pre-News Consideration
I strongly suggest that any pre-news trade be closed at this moment. As with NFP releases, liquidity will die down from now until the actual release time because most traders are likely to sit on the sideline.
DEFINITION
“Measures the change in number of employed people during the previous month, excluding the farming industry. A rising trend has a positive effect on the nation’s currency. Job creation is an important indicator of economic health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises.”
Historical Chart & Data For US NFP Employment
Thanks,
8:30am (NY Time) US NFP Forecast 140K Previous 103K
8:30am (NY Time) US Unemployment Rate Forecast 9.5% Previous 9.4%
ACTION: 210K BUY USDJPY / 70K BUY EURUSD
The Trade Plan
With today’s release, as per a special report by Bloomberg, the medium expectation is around 140K, with an estimated increase in the private sector payrolls at +145K. Market has shifted up its sentiment towards private sector jobs after this week's slew of positive PMI figures and Wednesday's ADP report...
The Unemployment Rate will be another important figure today as it is expected to increase slightly from 9.4% to 9.5%. If you remember, last Unemployment came out at 9.4%, which is probably a result of Jobless Claims filing decrease due to end of year holidays... Therefore, even if we get 9.6% or 9.7% of Unemployment Rate, market would probably not react with extreme volatility... However, if the Unemployment rate is above the psychological 10.0% level, then expect heavy USD sell-offs.
The Plan
Here's the general plan: If we get a significantly lower release on the NFP (70K or worse) and Unemployment Rate (9.7% or worse), I’d be looking to SELL USDJPY, SELL GBPJPY, BUY EURUSD, BUY GBPUSD on a retracement.
On the other hand, if we get a positive NFP release (+210K or better) and the Unemployment Rate remains at 9.5% or better, JPY should weaken immediately as USD/JPY may recover and move above 83 to 84 throughout the trading session... I will be looking to BUY USDJPY, BUY USDCHF, BUY USDCAD.
If we get a conflict release, we will wait and see how the market reacts first. If there is an overwhelming sentiment driving the market, there will be plenty of opportunities for entry. If you just wait for 5 minutes before making an entry, you’ll get a much clearer view.
Please read my detailed trading strategy for this release below…
The Market
Market has been trading with renewed optimism for the EUR as a resolution to the debt crisis is just around the corner... Therefore for the better part of the 2011, we've seen USD under considerable pressure; however, if we get a significant improvement in today's releases, USD could be mounting a major rally as most European majors are at strong resistance levels.
As usual, this release is probably going to define the general direction for the USD for the rest of the month... With yesterday's Trichet Press Conference ended with some disappointment in the Euro, a strong contrast in today's figure will change the short-term trend. However, if we get an inline or worse than expected number, EURUSD will definitely recover and retest 1.3850 levels...
Important Note: I believe the general market will be focused more on the Private Sector jobs, which are expected at a +145K. If we get a strong number, let's say in the range of 200K+, even if the NFP headline is inline or slightly less than expected, traders should have no problem in going LONG on USD.
NFP Trading Strategy
Below is a general guideline on how to trade NFP release. This is what I do with EVERY NFP release.
Let’s talk about how to trade this release: We’ll wait for the numbers to come out, but will not take any trade YET, even if we get our tradable figures (210K or 70K). We’ll wait for a possible revision to the previous release number, 1which is 103K, as the market usually overreacts with the Revision and chances favor for this trade to work out if we do not get conflicting releases between the revision and the actual release; at this point, still stay out of the market.
Then the next step is to wait for the Unemployment Rate, which is expected to be at 9.5% from 9.4% prior. If the Unemployment Rate were to surprise higher, we’ll have to really make an executive decision at the time of the release and see what is the primary focus of the market. Remember that the significant improvement last month (0.3%) was due to seasonal factors, therefore market should not react much even if we get 9.6% or so... As long as we don’t go over the 10.0% psychological level, I think traders may not even focus on this release.
After all of the numbers have been released. Wait for the market to push… then be patient and wait for a decent retracement before getting in. Look for recent support/resistance areas for entry as a high impact news with various components are extremely volatile, and those who are patient will always get a chance to enter with much better entry.
Additional Thoughts
With EURUSD hovering around the 1.3600 and AUDUSD just hovering the 1.0200 level, on a stronger NFP release, we could see significant losses in both pairs.
Pre-News Consideration
I strongly suggest that any pre-news trade be closed at this moment. As with NFP releases, liquidity will die down from now until the actual release time because most traders are likely to sit on the sideline.
DEFINITION
“Measures the change in number of employed people during the previous month, excluding the farming industry. A rising trend has a positive effect on the nation’s currency. Job creation is an important indicator of economic health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises.”
Historical Chart & Data For US NFP Employment
Thanks,
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