Henry Liu
Former FPA Special Consultant
- Messages
- 473
We’ll be trading the US NFP (Nonfarm Payroll) Employment Changes, it is probably the second most volatile news release for the week (FOMC being the first). Here’s the forecast:
8:30am (NY Time) US NFP Forecast 145K Previous 151K
8:30am (NY Time) US Unemployment Rate Forecast 9.6% Previous 9.6%
ACTION: 210K BUY USDJPY / 70K BUY EURUSD
The Trade Plan
With today’s release, as per a special report by Bloomberg, the expectation ranges from +100K to +200K, counting on an increase in the private sector payrolls estimated at +155K versus the 159K release in October. Market has shifted up its sentiment towards private sector jobs slightly after Wednesday's ADP report of 93K versus 70K of expectation...
The Unemployment Rate will be another important figure today as it is expected to stay unchanged at 9.6% from 9.6% in September. I believe that in the event we get a conflict of releases, such as a better NFP figure but worse Unemployment Rate, market will react more to the Unemployment rate if it’s above the psychological 10.0% level.
Considering both ISM Manufacturing and Non-Manufacturing PMI's (forecast), it is very likely that market is expecting a better than expected release, especially when you consider the employment components of both indeces.
The Plan
Here's the general plan: If we get a significantly lower release on the NFP (70K or worse) and Unemployment Rate (9.6% 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 9.6% or better, JPY should weaken immediately as USD/JPY may recover and move above 85 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
If you remember what took place during last NFP release, market reacted with confusion as the Federal Reserve just announced its QE2 plan and drove USD to the lowest levels in decades couple days ago. Market were questioning Fed's decision to go ahead with the QE2 while NFP and its revisions (two months prior) were showing strong signs of recovery.
We'll probably see some more demand for USD if we were to get another strong release, as two NFPs in a row should solidify trader's view on the economic recovery.
Market sentiment should be leaning towards a strong number, as both ISM PMI's are suggesting, not mentioning the surprise better than expected ADP report on Wednesday. Adding to the upcoming 600 Billion injection to stimulate the economy, USD should remain strong...
Important Note: I believe the general market will be focused more on the Private Sector jobs, which are expected at a +150K, and with recent ADP data printing out a 93K vs 70KE, we could see some optimism in the market for USD even prior to the release...
Therefore, I'd advice everyone to focus on both headline NFP and Private Sector job growth. If we get around 200K+ in the private sector growth, I think USD would really take off.
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 151K, 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 9.6% from 9.6% 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. As long as we don’t go over the 10.0% psychological level, I think traders may not focus exclusively on this release. However, if we do get over the 10.0% level, I’d probably be looking for a SELL on USD/JPY or other JPY crosses and Yen should strengthen.
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 USD/JPY looking to breakout the resistance level at 84.50, a strong release could push the pair over 85 and even to 86 figure, which is the next level of strong resistance...
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 145K Previous 151K
8:30am (NY Time) US Unemployment Rate Forecast 9.6% Previous 9.6%
ACTION: 210K BUY USDJPY / 70K BUY EURUSD
The Trade Plan
With today’s release, as per a special report by Bloomberg, the expectation ranges from +100K to +200K, counting on an increase in the private sector payrolls estimated at +155K versus the 159K release in October. Market has shifted up its sentiment towards private sector jobs slightly after Wednesday's ADP report of 93K versus 70K of expectation...
The Unemployment Rate will be another important figure today as it is expected to stay unchanged at 9.6% from 9.6% in September. I believe that in the event we get a conflict of releases, such as a better NFP figure but worse Unemployment Rate, market will react more to the Unemployment rate if it’s above the psychological 10.0% level.
Considering both ISM Manufacturing and Non-Manufacturing PMI's (forecast), it is very likely that market is expecting a better than expected release, especially when you consider the employment components of both indeces.
The Plan
Here's the general plan: If we get a significantly lower release on the NFP (70K or worse) and Unemployment Rate (9.6% 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 9.6% or better, JPY should weaken immediately as USD/JPY may recover and move above 85 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
If you remember what took place during last NFP release, market reacted with confusion as the Federal Reserve just announced its QE2 plan and drove USD to the lowest levels in decades couple days ago. Market were questioning Fed's decision to go ahead with the QE2 while NFP and its revisions (two months prior) were showing strong signs of recovery.
We'll probably see some more demand for USD if we were to get another strong release, as two NFPs in a row should solidify trader's view on the economic recovery.
Market sentiment should be leaning towards a strong number, as both ISM PMI's are suggesting, not mentioning the surprise better than expected ADP report on Wednesday. Adding to the upcoming 600 Billion injection to stimulate the economy, USD should remain strong...
Important Note: I believe the general market will be focused more on the Private Sector jobs, which are expected at a +150K, and with recent ADP data printing out a 93K vs 70KE, we could see some optimism in the market for USD even prior to the release...
Therefore, I'd advice everyone to focus on both headline NFP and Private Sector job growth. If we get around 200K+ in the private sector growth, I think USD would really take off.
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 151K, 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 9.6% from 9.6% 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. As long as we don’t go over the 10.0% psychological level, I think traders may not focus exclusively on this release. However, if we do get over the 10.0% level, I’d probably be looking for a SELL on USD/JPY or other JPY crosses and Yen should strengthen.
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 USD/JPY looking to breakout the resistance level at 84.50, a strong release could push the pair over 85 and even to 86 figure, which is the next level of strong resistance...
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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