TheNews

Trading the News: U.S. Non-Farm Payrolls

Another 200K expansion in Non-Farm Payrolls (NFP) paired with a meaningful pickup in U.S. wage growth may trigger a short-term selloff in EUR/USD as it puts increased pressure on the Federal Open Market Committee (FOMC) to further normalize monetary policy in 2016.

What’s Expected:



Why Is This Event Important:

Despite the cautious tone laid out in the Fed Minutes, a further improvement in labor market conditions may encourage the committee to adopt a more hawkish tone at the January 27 interest rate decision as Chair Janet Yellen remains confident in achieving the 2% inflation goal over the policy horizon.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Challenger Job Cuts (YoY) (DEC)	--	-27.6%
ADP Employment (DEC)	198K	257K
Gross Domestic Product (Annualized) (QoQ) (3Q F)	1.9%	2.0%

However, the slowdown in business outputs along with the persistent weakness in private-sector consumption may drag on job growth, and a dismal NFP print may prompt the FOMC to endorse a wait-and-see approach in an effort to mitigate the downside risk for growth and inflation.

How To Trade This Event Risk
Bullish USD Trade: NFP Climb Another 200K or Greater, Wage Growth Picks Up

• Need red, five-minute candle following the NFP print to consider a short trade on EUR/USD.
• If market reaction favors a bullish dollar trade, sell EUR/USD with two separate position.
• Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward.
• Move stop to entry on remaining position once initial target is hit; set reasonable limit.

Bearish USD Trade: U.S Employment Report Disappoints

• Need green, five-minute candle to favor a long EUR/USD trade.
• Implement same setup as the bullish dollar trade, just in the opposite direction.

Potential Price Targets For The Release
EURUSD Daily

• Long-term outlook for EUR/USD remains tilted to the downside amid the deviating paths for monetary policy but, failure to preserve the bearish setup carried over from the previous month may highlight a larger correction in the exchange rate.
• Interim Resistance: 1.1052 (November high) to 1.1090 (50% retracement)
• Interim Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% expansion)

Impact that the U.S. Non-Farm Payrolls report has had on EUR/USD during the previous month

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
NOV 2015	12/04/2015 13:30 GMT	200K	211K	-1	-49

November 2015 U.S. Non-Farm Payrolls
EURUSD M5: 60 pips range price movement by Non-Farm Employment Change news event:




more...