US NFP (Nonfarm Payroll) Employment | October 4, 2013 | Currency News
US NFP is perhaps the most important release for the Forex market for the month due to the surprise from the Feds during the last FOMC meeting. A strong release will revive the argument for October Fed tapering, whereas a weak release should drive even the most bullish analysts to a 2014 Fed tapering.
8:30am (NY Time) US NF Employment Forecast 179K Previous 169K
8:30am (NY Time) US Unemployment Rate Forecast 7.3% Previous 7.3%
Deviation: 70K (BUY USD 249K / SELL USD 109K)
The Trade Plan
9Today’s NFP Employment Change release is forecasted at 179K. The Unemployment Rate is expected to remain at 7.3%. If we get a significantly lower release on the NFP (109k or worse) and slightly higher Unemployment Rate (7.4% or more), I´d be looking to SELL the USD against stronger currencies as speculation for Feds to continue with QE should dominate the market. On the other hand, if we get a strong NFP release (249K or better) and the Unemployment Rate falls or remain at 7.3%, USD could strengthen and I would BUY USD against other weaker currencies (use CSM or recommended pairs above).
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.
Outlook score is derived from market sentiment, focus, and economic indicators for the currency. It represents the long-term trend of the currency and its market perception. In short, a strong Outlook Score means more long-term demand for the currency, and a weak Outlook Score is the opposite.
[UPDATE – RESERVED FOR UPDATE ON OCT. 3, 2013]
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 (249K to 109K). Wait for a possible revision of the previous release number of 169K, and market usually overreacts with the Revision and chances favor that a solid trade will present itself if we don’t 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 be at 7.3%. If the Unemployment Rate were to surprise higher, we’ll have to make a decision based on the market sentiment coming into this release… Of course, if Unemployment rate were to fall below 7.3%, then we should see a surge in USD as traders speculate Fed bond tapering in October.
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.
US NFP Employment 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.
Hello Henry Liu
Thank for nice your site;
“But the US labour department has confirmed that NFP release will be postponed, and this has left the ADP report on private sector hiring – released on Wednesday – as the main guide to conditions in the jobs market.”
Hi Jean, we are aware of the NFP cancellation by the labor department, but will leave the scheduled news in the calendar for now, just in case they decide to go ahead with it.