How to trade the NFPs ?The report of the Non Farm Payrolls in the United States is considered as one of the most important economic indicators closely watched by traders all over the world.
The report reviews the number of jobs created by the U.S. economy over the past month with the exclusion of workers in the agricultural sector, government officials and agencies, non-profit as well as people who are self-employed.
It is expected to add about 184 000 jobs on July compared to 195 000 jobs in June, as well as the unemployment rate is expected to fell from 7.6% (last month) t to 7.5% (this month) .
The NFPs report importance lies not only as one of the most
important monthly indicators of the U.S.
economy performance, but also on its effect on the reaction of the U.S. Federal
Reserve and the monetary policy.
The position of the central bank, as Ben Bernanke claimed in his statement on the last meeting, pointed to the possibility of starting to slow the monetary easing stimulus later this year with the possibility of ending the asset purchase program by mid-2014.
Nevertheless, the main condition to realize all the Reserve Bank measures and statements of Ben Bernanke is the need of a sustainable improvement in the performance of the U.S. economy.
For this, the expected reaction scenario will be as follows.
*The first scenario: View unexpected jump in U.S. employment numbers during the last month and if it rise and breaches up the barrier of 200 000 jobs. In this case, we can expect a very strong upward movement of the U.S. dollar , on the basis that this scenario may encourage the Fed to take his decision is expected to reduce the asset purchase program as soon as possible and may be on his next meeting this month.
*The second scenario: View read without widely expected, means below 150 000 jobs , which would weaken the U.S. dollar to a large extent where to review monetary policy adapted applied by the Fed under the bad outlook of economic groth and instability.
*The third scenario: that the U.S. employment numbers come within the previous forecast or reported slightly different, a scenario which is and has always been the most likely, but it is also the most risky, especially for traders who trade during the news release.
For this reason, we recommend our traders to remain cautious and keep quite trading until the market will return to its general direction , because the market will witness great volatility during the news , and to enter stop loss orders, that would be reached during the news.
So ADP Nonfarm Payrolls affect all currency pairs in the market, especially the euro /dollar, sterling, gold, USD /CHF ...
