Forex Signal (Wed November 3, 2010 8:15am NY Time EDT) - US ADP NFP Employment Change

Henry Liu

Former FPA Special Consultant
ADP or Automatic Data Processing (NASDAQ:ADP) is releasing it’s own estimate for the private sectors of NFP (Nonfarm Payroll). This is high impact release and it’s followed by currency traders as they look for hints on Friday’s NFP official release. Here’s the forecast:

8:15am NY Time US ADP NFP Change Forecast 21K Previous -39K

The Trade Plan

As stated in previous analyses on ADP NFP news, I usually don’t trade it but I use this release for future trend references. However, I assume that most traders are likely to do the same, but if the deviation of 50K is actually hit, true speculators will probably have not problem jumping into the market, and this will undoubtedly change market perception for Friday’s NFP release; therefore it is best to be around your computer during the release time rather than finding out what happened hours later and perhaps missed the entire movement.

With the above being said, we'll be looking for a deviation of 50K, so if we get 70K or better release, I’d be looking to BUY USD/JPY; if we get a -30K or worse, then I’d be looking to BUY GBPUSD... I will also recommend to look at my strength meter and find the best currency against the USD pending the actual data.

In the event that we do get our deviation, we'll be trading this news based on after-news Retracement Trading Method. For more information, read:
Henry's Retracement Trading Method.

The Market
With NFP private jobs forecasted at +80K by Bloomberg, or a slight increase from last month's figure of 64K, this ADP release's range is between +15K to +30K, which averages out at around 20K.

With the current market focus on the Fed stimulus, this release may not have much impact unless we get a strong deviation. Market is likely to focus more on the upcoming ISM Non-Manufacturing PMI for hints on Friday's NFP. But remember, market always overreacts when we get a huge surprise... anything above 70K deviation should be considered huge...

Additional Thoughts
The ADP NFP Employment Release is aways considered as a high impact release because ADP is the largest private payroll processing provider in the U.S., traders in general pay more attention to this release, especially during NFP week. ADP usually releases its version of Non-Farm Payroll numbers before the actual NFP based on it’s proprietary private payroll data.

I'll use caution when trading this release even if we get our deviation. When it comes to NFP, market always exaggerates.

Pre-news Consideration
There should not be much pre-news trading opportunities for this release.

Historical Chart & Data For US ADP NFP


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