Trade idea around US dollar Non Farm payroll

So, I have been so busy that I have had time to do Forex trading. Need to get back, ASAP. Anyways, had some time today so looked up the Non Farm payroll today and got a trading idea/tip, try it out and let me know how it goes ( please follow my blog).

BTW the US NFP is going to be announced in 2.5 hours or 2030 hours Singapore time.

Ok so here is my  trade idea is: USD NFP If Actual NFP is greater than 160K, then go Long USDJPY

SL=30 pips TP=30 pips.**

I did some quick reading before we arrived at the above (btw, the article has nothing to d with the trading idea)

Some reading on the NFP-source: bkassetmanagement.com)

FX: Now Onto Payrolls….

With the European Central Bank’s monetary policy meeting now behind us, it is time to focus on the U.S. non-farm payrolls report. In some ways, investors are already thinking about payrolls because today’s strong rally in equities and currencies can be largely attributed to better than expected reports on the labor market. Economists initially anticipated a sharp pullback in job growth after seeing non-farm payrolls rise 163k in July but after the latest reports, a number of banks have upgraded their NFP forecasts. More specifically, job cuts eased in the month of August according to Challenger Grey & Christmas while companies added more workers to their payrolls according to ADP. While the ADP report has had a poor record of tracking payrolls, it has been more accurate forecasting the direction of payroll growth. Economists had only been looking for a 140k rise and instead, ADP reported a 201k increase in workers last month. Jobless claims also fell to its lowest level in 4 weeks and most importantly the employment component of ISM non-manufacturing rose to its highest level since April.

According to these leading indicators for non-farm payrolls, job growth could surprise to the upside but not so fast! The main argument for weaker payroll growth is the uptick in jobless claims, which is worrisome. Also, while the employment component of ISM non-manufacturing has a strong correlation with non-farm payrolls, it failed to accurately forecast the uptick in July. The index actually fell from 52.3 to 49.3 that month which means that the rebound seen today to 53.8 could be snapback from prior levels. Consumer confidence has also been mixed with the Conference Board reporting the largest decline in sentiment since October, which contrasts with the increase in the University of Michigan report. Currently economists are looking for payroll growth to slow to 130k, down from 163k the prior month. Based on the other labor market reports, there’s reason to believe that job growth could surprise to the upside but fall short of exceeding the 163k rise reported for the month of July.

Non-farm payrolls is one of those economic reports that can cause tremendous volatility for the forex markets and this month’s number is particularly important because it can determine whether or not the Federal Reserve eases next week. When the Fed Chairman last spoke in Jackson Hole, he did not commit to any changes in monetary policy but made a strong case for more stimulus. At the time, many people believed that he wanted to wait for another non-farm payrolls report before making a decision to ease. If payrolls grow by more than 130k, the central bank could opt to postpone easing but if it rises less than 100k, then QE3 or changes to the extended period language in the FOMC statement could be in play.

See the article here

Happy trading!

(**disclaimer: this is my personal thought, and I am not responsible for any outcome, please use your own discretion as any outcome from this trade is not my responsibility)