Trading NFP NonFarm Payroll Report – March 5th

I had some constant revisions to the forecast number by the market many times over this month. This is rather unusual and it shows the sensitivity that the market has to this report. Normally, the forecast will be revised at the birth of the month and that will be it.

However, this time around, we did start the month with -20k forecast, and it has been revised several times to now, at -56k. I was waiting for any last minute forecast revisions(I am not quite sure what is the norm these days!) before finally writing my thoughts on this release.

Now, blame me for reading into the report too much, but I feel that;

1)      The report’s actual forecast was intentionally delayed to massage the overall sagginess of the US economy and

2)      The report could be far worse than what was expected and hence this slow transitional phase of number releases.

Well, call me paranoid, as my friends call me, twisted, but I have some hunch sometimes and they are mostly wrong most of the time.:)

Anyway, if that should happen(worse numbers than expected), I can always say “See, I told you so!”

Well, back to more grounded beliefs, I feel that this report will have a negative impact on the USD and you should look to sell the USD and buy all major pairs.

Once again, do not trade the market trying to predict what is going to happen. Let the numbers be released and upon confirmation with our sentiments, we will trade this news release.

Here is my take on it;

If figures come out weak at -80k(moderate) below -120k(extreme) (My bias)

Sell USD – Buy Aud/Usd, – Sell Usd/Cad
Buy JPY – Sell Gbp/Jpy , Eur/Jpy (extreme only)

If figures come out strong at 20k(moderate) and 50k(extreme)

Buy USD – Sell Gbp/Usd, Eur/Usd
Sell JPY – Buy Aud/Jpy, Cad/Jpy(extreme only)

There is also Unemployment Rate report due for release at the same time. If there is conflicting sentiments between both reports, don’t trade the event.

As always, pay close attention to the numbers and wait for the market to react. If the reaction is inline with our beliefs we will trade the market. Or else, stand down as there is always another trading day.  Don’t over leverage and never ever try to predict the market.

If you are not experienced trading NFP, you might want to stand by the sidelines.

Happy Trading,
Seeni

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