USD/JPY: Trading the ADP Non-Farm Employment Change

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The ADP Non-Farm Employment Change measures the change in the number of employed people, excluding workers in the farming industry. A reading which is higher than the market forecast is bullish for the dollar.

Here are the details and 5 possible outcomes for USD/JPY.

Published on Wednesday at 1:15 GMT.

Indicator Background

Job creation is one of the most important leading indicators of overall economic activity. Thus publication of employment data, such as the Non-Farm Employment Change, is highly anticipated by the markets. Traders should note that the ADP indicator is released two days prior to the government publication of non-farm employment data.

After a stellar January, the indicator dropped in February to 170K, well below the market forecast of 189K. The market prediction for March calls for an increase to 201K. Will the indicator rebound and beat the market forecast this month?

Sentiment and Levels

USD/JPY has been on a strong upward trend in recent weeks. Economic indicators in Japan such as housing starts and household spending remain weak, and the trade deficit is weighing on the yen. So, the sentiment is bullish on USD/JPY towards this release.

Technical levels from top to bottom: 82.20, 81.50, 81, 80.50, 79.50 and 78.30.

5 Scenarios

 

  1. Within expectations: 195K to 207K: In this scenario, USD/JPY could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
  2. Above expectations: 208K to 214K: A reading above expectations would signal economic expansion, and could push the pair above one resistance level.
  3. Well above expectations: Above 214K: A sharp rise in employment numbers could propel USD/JPY upwards, and two levels of resistance or more can be broken.
  4. Below expectations: 188K to 194K: Such a scenario could pull the pair downwards, with one support level at risk.
  5. Well below expectations: Below 188K: A poor reading is bearish for the dollar, and USD/JPY could break two or more support levels.

For more on the yen, see the USD/JPY forecast.

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About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.