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What does the data mean to the market?
The headline data of Non-Farm Payrolls (NFP) reflects the change in the number of people employed during the previous month. A higher number of people employed is good for the US economy and would create a buying opportunity on the USD. Vice versa, a lower number would be bad for the US and would generate a sell on the USD.
NFP comes out with six lines of data which makes this report far more complex. The other two significant lines of data I watch are the Unemployment Rate and Average Earnings.
The Unemployment Rate, a lower number, is good for the USD and vice versa. Whereas Average Earning a higher number is better for the US economy and vice versa.
All three lines must deviate in the same direction. I will not tolerate a conflict from either UR and AE.
Historic deviations and their outcome
July 2 2021 A decent size 130 deviation gave a good spike, but with a 0.3 conflict from Unemployment Rate, we soon saw the move being snuffed out, seeing a heavy retrace, just as expected. But, again, this shows the importance of looking at all lines of data.
Check out the price action here:
https://calendarapi.galaxysoftwareinc.com/l/59294/aHR0cHM6Ly9jYWxlbmRhci5nYWxheHlzb2Z0d2FyZWluYy5jb20vIy9jaGFydDtpPTU5Mjk0O3Q9MjAyMS03LTIlMjAxMjozMDowMC4wO3M9VVNESlBZO3I9TTE
June 4 2021 With a sizeable negative deviation of 116k we saw some minor conflicts, but they were not big enough to overpower the shock of the headline. The move was slow and sustained, and it would have given plenty of opportunities to enter and bank some good pips.
Check out the price action here:
https://calendarapi.galaxysoftwareinc.com/l/57168/aHR0cHM6Ly9jYWxlbmRhci5nYWxheHlzb2Z0d2FyZWluYy5jb20vIy9jaGFydDtpPTU3MTY4O3Q9MjAyMS02LTQlMjAxMjozMDowMC4wO3M9VVNESlBZO3I9UzEw
May 7 2021 Today I saw a massive deviation of -734k on the headline Non-farm Payrolls with a supporting +0.3% rise from the Unemployment Rate, and This crushed the US dollar across the board. I managed to bank some excellent profits early on the back of this data as the USD pairs continued to slide south. It was a shame that the Average Earnings conflicted largely. A conflict of +0.7 on this line would have upset the move-in standard times, but not today!
Check out the price action here:
https://calendarapi.galaxysoftwareinc.com/l/50023/aHR0cHM6Ly9jYWxlbmRhci5nYWxheHlzb2Z0d2FyZWluYy5jb20vIy9jaGFydDtpPTUwMDIzO3Q9MjAyMS01LTclMjAxMjozMDowMC4wO3M9VVNESlBZO3I9TTE
I will use forecasts of:
Change in NonFarm Payrolls 870
Unemployment Rate 5.7
US Average Hourly Earnings (Y/Y) 0.3
Today's trade plan
I'll be looking for a 200k deviation in either direction from Non-Farm Payrolls without any conflicts from Unemployment and no significant conflict from Average Earnings, We can expect an excellent move. This one can get volatile immediately after the data is released while the market digests the numbers. Hold onto your hats. This one is n