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Forex Signal (Fri June 3 2011, 8:30am NY Time EST) - US Nonfarm Payroll Analysis

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Jun 2, 2011.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

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    We'll be trading the US NFP (Nonfarm Payroll) Employment Change, it is the focus news release for the week. Here's the forecast:

    8:30am (NY Time) US NF Employment Forecast 164K Previous 244K
    8:30am (NY Time) US Unemployment Rate Forecast 9.0% Previous 9.0%
    ACTION: 234K BUY USDJPY / 94K BUY EURUSD


    The Trade Plan
    Todays NFP Employment Change release is forecasted at 164K. The ADP employment report revealed a reduction in job growth rate and left policy makers looking into an uncertain future. The Unemployment Rate is expected to hold at 9.0%. If we get a significantly lower release on the NFP (94K or worse) and Unemployment Rate (9.0% or worse), I'd be looking to BUY EURUSD or GBPUSD on a retracement. On the other hand, if we get a positive NFP release (234K or better) and the Unemployment Rate remains at 9.0% or better, JPY should weaken immediately as USD/JPY may recover and move around the 80.00 level throughout the trading session. Then it should be safe to BUY USD/JPY, BUY USD/CHF, BUY USD/CAD.

    If we get a conflicting release, then well wait and see how the market reacts first. If there is an overwhelming sentiment driving the market, well get plenty of opportunities for an entry if we just wait for 5 minutes after the release; you'll get a much clearer view.

    Please read my detailed trading strategy for this release below.
    Henry Liu's Trading Method

    The Market
    Wednesdays ADP employment report showed that the private sector took a hard hit in May. The struggling job sector continues to be an Achilles heel to economic stabilization. Job creation is the catalyst needed to yield economic growth but risk remains high as energy prices go up. Employers must cut hiring efforts in order to compensate for high operating costs. Manufacturing companies across the globe took a hit due to reduced demand and the high costs of operational expenses, mainly fuel. High energy costs yield high operational expenses which reduces the employment growth rate.

    Fridays NFP Employment report is expected to show that less jobs were added in May and that the rate of unemployment held at 9.0%.

    NFP Trading Strategy
    Let's talk about how to trade this release: We'll wait for the numbers to come out but continue to hold on a trade, Even if we get our tradable figures (264K to 124K). Wait for a possible revision of the previous release number of 244K as the market usually overreacts with the Revision and chances favor that a solid trade will present itself if we dont get a 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 remain at 9.0%. If the Unemployment Rate were to surprise higher, were faced with an imperative decision at the time of the release.

    After all of the numbers have been released, wait for the market to push and wait patiently 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 a much better entry.

    Additional Thoughts
    We do have several choices to go LONG on USD and I believe USDJPY and GBPJPY may provide some of the best movements as both pairs are likely to benefit from BOJ intervention and USD strength.

    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 and Data for US Nonfarm Payroll Analysis




    Thanks,




    [​IMG]
     
    #1 Henry Liu, Jun 2, 2011
    Lasted edited by : Sep 8, 2016
  2. Xenofanes

    Xenofanes Private

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    hope today it makes a big movement with big fat profit

    Thank you Henry for your effort in helping us to profit on news on Forex. :)
     
  3. Mohd Amirul Nazri

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    to recognize your credibility, it would be better if you provide post news release analysis.

    Traders will respect u more. Trust me.:confused:
     
  4. amhar

    amhar Recruit

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    I think you were left behind. Henry always send a post before the week started and another post on the day of news. You can subscribe to his newsletter. By the way thanks henry, yesterday I got many pips form NFP.
     

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