NFP Updates

Posted on March 5, 2010 by Yohay
Filed Under Forex Opinions | 1 Comment

Earlier in the week, I’ve written a Nonfarm Payrolls preview in which I explained how the low expectations from the outcome serve the US dollar. The low expectations now became lower. Here are some updates about expectations, ways to follow the event and possible ways to trade it.

During the week, the expectations for a loss of 40K jobs was revised to a loss of 50K to 56K according to various news agencies. Unemployment Rate is still expected edge up from 9.7% to 9.8%.

If the low expectations are met, the dollar bulls will continue the long term trend. If the result is better than expected, the dollar will gain immediately. Only a really bad result, such as unemployment rate that gets back above 10% will hurt the dollar.

But as we’ve seen in the past during such events, the market moves rapidly and many times unexpectedly during the monthly circus of the NFP. New traders should stay out of the market around the release and just watch the wild action.

You’re welcome to follow the event with forex expert Alex Kazmarck in a live trading session. I’ve watched this free live session in previous NFP events and it was great. Let’s see what advanced traders could possibly do:

Binary Options for Non-Farm Payrolls

For advanced traders, binary options can be a useful tool for this event. The strong moves can produce an opportunity to trade, but this should be done with caution.

My more probable scenarios are for dollar run after the release, that will follow a result that matches expectations or a result that exceeds them. In such a case, the forex position will be in favor of the dollar, and the binary option will be against it.

For example: EUR/USD short with a CALL option on this pair. In the opposite scenario, a possible strategy for trading a big loss of jobs and a leap in the unemployment rate would be going long on EUR/USD with a PUT binary option.

You’re welcome to check out this interesting trading tool at StartOptions. They provide a demo account, so you can get familiar with binary options before trading real money. I’m affiliated with them.

EUR/USD

Why am I mentioning EUR/USD? This is the strongest vehicle of American economic releases. Also GBP/USD moves strongly by American releases, but the Euro feels it stronger.

In addition, the Euro zone is rather vulnerable in recent months. The recovery in Europe is slowing and the Greek crisis refuses to leave the agenda. A resolution to the Greek debt issues always seems close, but many hurdles keep it alive. So, this vulnerability makes it a good candidate for surrendering to the greenback’s strength.

EUR/USD did make a small recovery this week and reached 1.3735. This was short lived, and the pair returned below 1.36. The line to watch is 1.3423. This is a historic line that also supported the Euro three times in recent weeks. Holding above this line is critical for the Euro. A drop below it will signal further weakness.

Apart from the Euro, I’ll be following the pairs I follow all the time: GBP/USD, USD/CAD and AUD/USD. Non-Farm Payrolls usually have a long term effect on the market. I’ll post an analysis of the NFP after the release. Stay tuned!

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

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Comments

One Response to “NFP Updates”

  1. No Expectations, No Disappointments – Dollar Enjoys NFP Once Again | Forex Crunch on March 5th, 2010 3:40 pm

    [...] mentioned in my NFP previews, the low expectations were in favor of the dollar. The initial reaction to the Non-Farm Payrolls [...]

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