Strong U.S. Dollar

- U.S. Non-Farm Payrolls to Rise180K, Unemployment Rate to Hold at 6.7%
- Will December NFP See Large Upward Revision from 74K?

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

The U.S. economy is expected to add another 180K jobs in January, but another dismal print may undermine the bullish sentiment surrounding the dollar, especially if we don’t see a large upward revision to the 74K December reading.

What’s Expected:

Time of release: 02/07/2014 13:30 GMT, 8:30 EST
Primary Pair Impact: EURUSD
Expected: 180K
Previous: 74K
DailyFX Forecast: 150K to 200K

Why Is This Event Important:

Nevertheless, a positive employment report may encourage the Federal Reserve to reduce the asset-purchase program by another $10B at the March 19 meeting, and the central bank may look to normalize monetary policy sooner rather than later as Fed officials see a stronger recovery in 2014.

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Gross Domestic Product (Annualized) (QoQ) (4Q A)	3.2%	3.2%
Consumer Confidence (JAN)	78.0	80.7
Advance Retail Sales (MoM) (DEC)	0.1%	0.2%

Firms in the U.S. may ramp up on hiring amid the resilience in private sector consumption, and an upbeat NFP print may trigger a near-term rally in the dollar as it raises the scope of seeing the Fed raise the benchmark interest rate ahead of schedule.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Challenger Job Cuts (YoY) (JAN)	--	11.6%
ADP Employment Change (JAN)	185K	175K
ISM Manufacturing- Employment (JAN)	--	52.3

However, the recent batch of data certainly does not bode well for the labor market amid the uptick in planned job cuts along with the slowdown in business outputs, and another dismal release may trigger a further decline in the USD as it dampens the outlook for growth and inflation.

How To Trade This Event Risk

Bullish USD Trade: NFP Increases 180K+; Unemployment Holds at 6.7%

• Need to see red, five-minute candle following the print to consider a short trade on EURUSD
• If market reaction favors a long dollar trade, sell EURUSD 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: December Employment Report Falls Short of Market Forecast

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

Potential Price Targets For The Release

EURUSD :

• Preserves Descending Channel; Carving Lower High Ahead of NFP?
• Relative Strength Index Needs to Maintain Bearish Trend to Favor Downside
• Interim Resistance: 1.3800 (100.0 expansion) to 1.3830 (61.8 retracement)
• Interim Support: 1.3450 (38.2% retracement) to 1.3460 (50.0% expansion)

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

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
DEC 2013	01/10/2013 13:30 GMT	196K	74K	+101	+97

Despite strong ADP Employment Figures ahead of the NFP release last month, US Non-Farm Payrolls for December came in much weaker than market expectations and pushed the USDollar lower across the board. Surveys called for a net positive 196K reading, but figures indicated a weak 74K change. It is worth noting that further potential downside was at least limited by a strong upward revision from 203K to 241K for the November period. Market participants will surely be looking for another upward revision here in addition to a strong print to support the greenback. As for insight into this print, the ADP Employment Figures on Wednesday came in slightly below expectations, but the ISM Non-Manf. Employment component saw a month over month increase. With US yields, USD/JPY and the S&P 500 all at critical levels, a disappointing print could prove disastrous for the greenback moving into the end of the trading week. The lack of a strong upward revision for the December figure will also likely be viewed poorly by market participants.

--- Written by David Song, Currency Analyst

More...

01: NON FARM PAYROLL (Part 1) - ECONOMIC REPORTS FOR ALL MARKETS

This is the 1st video in a series on economic reports created for all markets, or for those who simply have an interest in economics. In this and the next lesson, we cover the Employment Situation Report, also known as Non Farm Payroll.

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Non-farm Payrolls (metatrader5.com)

Non-farm Payrolls is the assessment of the total number of employees recorded in payrolls.
This is a very strong indicator that shows the change in employment in the country. The growth of this indicator characterizes the increase in employment and leads to the growth of the dollar. It is considered an indicator tending to move the market. There is a rule of thumb that an increase in its value by 200,000 per month equates to an increase in GDP by 3.0%.

• Release Frequency: monthly.
• Release Schedule: 08:30 EST, the first Friday of the month.
• Source: Bureau of Labor Statistics, U.S. Department of Labor.

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FF forum economic calendar :

• Source : Bureau of Labor Statistics
• Measures : Change in the number of employed people during the previous month, excluding the farming industry
• Usual Effect : Actual > Forecast = Good for currency
• Frequency : Released monthly, usually on the first Friday after the month ends
• Why Traders Care : Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity
• Also Called : Non-Farm Payrolls, NFP, Employment Change

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mql5 forum thread : Non-Farm Employment Strategy

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AUDUSD M5 with 45 pips in profit (by equity) for NFP :

EURUSD M5 : 87 pips price movement by NFP news event :

Trading EURUSD during NFP :

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02: NON FARM PAYROLL (Part 2)- ECONOMIC REPORTS FOR ALL MARKETS

Data Announcements: Non-Farm Payrolls, GDP Figures and Central Bank Interventions

The most obvious one is the USA Non-Farm Payroll Numbers; the unemployment rate, initial unemployment claims and consumer sentiment tend to account for the largest moves in both US and British markets. It is possible to trade this data announcement but it is quite hard to guage the immediate reaction of the market. Other important data include the GDP figures, consumers price index and central bank interventions.

2013-02-07 13:30 GMT | [USD - Non-Farm Employment Change]

• past data is 75K
• forecast data is 185K
• actual data is 113K according to the latest press release

if actual > forecast = good for currency (for USD in our case)

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Nation adds 113,000 jobs

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• Jobless rate falls to five-year low
• Construction, manufacturing, wholesale trade, and mining see gains

The nation added a net of 113,000 nonfarm payroll jobs last month, dropping the unemployment rate of 6.6 percent, lowest in the past five years, the the U.S. Bureau of Labor Statistics says Friday.

Employment grew in construction, manufacturing, wholesale trade, and mining.

Both the number of unemployed persons, at 10.2 million, and the unemployment rate, at 6.6 percent, changed little in January. Since October, the jobless rate has decreased by 0.6 percentage point.

Among the major worker groups, the unemployment rates for adult men (6.2 percent), adult women (5.9 percent), teenagers (20.7 percent), whites (5.7 percent), blacks (12.1 percent), and Hispanics (8.4 percent) showed little change in January. The jobless rate for Asians was 4.8 percent (not seasonally adjusted), down by 1.7 percentage points over the year.

The number of long-term unemployed (those jobless for 27 weeks or more), at 3.6 million, declined by 232,000 in January. These individuals accounted for 35.8 percent of the unemployed. The number of long-term unemployed has declined by 1.1 million over the year.

After accounting for the annual adjustment to the population controls, the civilian labor force rose by 499,000 in January, and the labor force participation rate edged up to 63.0 percent. Total employment, as measured by the household survey, increased by 616,000 over the month, and the employment-population ratio increased by 0.2 percentage point to 58.8 percent.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) fell by 514,000 to 7.3 million in January. These individuals were working part time because their hours had been cut back or because they were unable to find full-time work.

In January, 2.6 million persons were marginally attached to the labor force, little changed from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the four weeks preceding the survey.

Among the marginally attached, there were 837,000 discouraged workers in January, about unchanged from a year earlier. Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.8 million persons marginally attached to the labor force in January had not searched for work for reasons such as school attendance or family responsibilities.

US jobs data leaves markets confused

Markets were uncertain how to react to the worse than expected non-farm payrolls, given the headline figure of 113,000 was lower than forecast but the jobless rate at 6.6% was slightly better than the predicted 6.7%, our market reporter Nick Fletcher writes.

Initially the FTSE 100, up 16 points before the data was released, fell back to show a 10 point loss, but this was soon reversed and the index is currently virtually unchanged.

Dow futures, up around 52 points ahead of the jobs report, are now down 42 points. The US dollar initially slipped back against the yen and the pound.

U.S. job growth accelerated in the month of January compared to the anemic growth seen in December, according to a report released by the Labor Department on Friday, although the pace of growth still fell well short of economist estimates. Despite the weaker than expected job growth, the unemployment rate still edged down to 6.6 percent.

More...

U.S. Treasury Secretary Expects Strong Economic Data in Second Half

U.S. Treasury Secretary Jack Lew said Wednesday that he expects strong economic data for the second half of the year after lackluster growth in the first quarter.

"After a harsh winter that restrained growth in the first quarter, we are still expecting the underlying strength of the economy that was evident last year to result in a strong second half of this year," Lew said in a speech in Jerusalem at a conference of the U.S.-Israel Joint Economic Development Group.

Lew said recent economic data supports his optimistic outlook. In May, the U.S. economy added 217,000 new jobs, after similar job growth in the previous three months, although unemployment in May remained flat at 6.3%. Inflation has also been picking up, with the consumer-price index rising 0.4% on the month in May.

In the first quarter, the U.S. economy grew just 1%. This recently caused the International Monetary Fundto cut its growth outlook for the U.S. economy in 2014 to 2% from 2.8%.

Lew's comments came hours before the U.S. Federal Reserve is scheduled to issue an outlook on the economy as well as comments on monetary policy.

Lew spoke along with Israeli finance minister Yair Lapid at an annual meeting of Israeli and American economists and policy makers.

Gold for August delivery, the most actively traded contract, was recently down 0.7% at $1,178.10 a troy ounce on the Comex division of the New York Mercantile Exchange.

The dollar rebounded after several days of declines Thursday, as U.S. economic data showed retail sales in May increased in line with expectations. A stronger dollar tends to dent prices for gold, which is denominated in dollars and becomes more expensive for foreign buyers when the buck rises.

The Wall Street Journal Dollar Index, which gauges the dollar against 16 currencies, was recently up 0.5% to 86.50.

“Gold is being pushed around by a stronger dollar,” said Frank Lesh, a broker at Futurepath Trading.

In the longer term, “there is not much interest in gold at the moment. It just hasn’t been a very good performer, and other assets have been more rewarding,” Mr. Lesh said.

Expectations of rising interest rates have weighed on gold in recent months. Prices are down more than 4% from May highs, while assets in the world’s biggest gold exchange-traded fund, the SPDR Gold Trust, have dwindled to 704.22 metric tons, their lowest level since September 2008.

“As long as ETF outflows continue, the gold price is unlikely to make any significant gains,” analysts at Commerzbank said in a note.


the source