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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
September 3 2021 Today I saw a massive deviation of -515k on the headline Non-farm Payrolls with Unemployment Rate coming out as expected. We saw a decent 20 pip move with continuation after that for the next few minutes. Noticeably GBPUSD worked better on this report.
Check out the price action here:
https://calendarapi.galaxysoftwareinc.com/l/62454/aHR0cHM6Ly9jYWxlbmRhci5nYWxheHlzb2Z0d2FyZWluYy5jb20vIy9jaGFydDtpPTYyNDU0O3Q9MjAyMS05LTMlMjAxMjozMDowMC4wO3M9VVNESlBZO3I9TTE
August 6 2021 A small 74 deviation actually created a nice move but mainly because UE helped with a 0.3 deviation.
Check out the price action here:
https://calendarapi.galaxysoftwareinc.com/l/60777/aHR0cHM6Ly9jYWxlbmRhci5nYWxheHlzb2Z0d2FyZWluYy5jb20vIy9jaGFydDtpPTYwNzc3O3Q9MjAyMS04LTYlMjAxMjozMDowMC4wO3M9VVNESlBZO3I9UzEw
July 2 2021 A decent size 130 deviation gave an excellent spike, but with a 0.3 conflict from Unemployment Rate, we soon saw the move being snuffed out, seeing a severe 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
I will use forecasts of:
Change in NonFarm Payrolls 500
Unemployment Rate 5.1
Today's trade plan
This report is nicely in focus. It holds the key to when the US Federal Reserve will start tapering.
Today I want to see a deviation to the downside of -250 or +175 upside to take a trade in the relative direction. Anything between those figures, I would expect to have a poor reaction as we want the markets to be sure which way this will affect the Fed's decision over monetary policy.
I'll accept a conflicting deviation from the Unemployment Rate of +/- 0.3% today. I'll set up mainly on GBPUSD as this has been working better on this report lately.
This one can get volatile immediately after the data is released while the market digests the numbers. Hold onto your hats. This one is not for t