Tuesday, August 2, 2011

US NFP (Non Farm Payroll) ADP - 3 August 2011

US NFP (Non Farm Payroll) ADP - 3 August 2011

ADP or Automatic Data Processing (NASDAQ:ADP) is releasing it´s own estimate for the private sectors of NFP (Nonfarm Payroll). This is a high impact release and it´s followed by currency traders as they look for hints on Friday´s NFP official release. Here´s the forecast:

8:15am NY Time US ADP NFP Change 

Forecast 100K Previous 157K
 
ACTION: 150K BUY USDJPY / 50K BUY EURUSD

The Trade Plan

I usually don´t trade this release but I use it for future trend references. However, if the deviation of 50K is actually hit, the market probably wont have a problem pushing it, and this will undoubtedly change market perception for the NFP release; therefore its best to be around your computer during the release time rather than find out what happened hours later and potentially miss the entire movement.

With the above being said, we´ll be looking for a deviation of 50K, so if we get 150K or better release, I´d be looking to BUY USD/JPY; if we get a 50K or worse, then I´d be looking to BUY EURUSD... I will also recommend to look at my strength meter and find the best currency against the USD pending the actual data.

In the event that we do get our deviation, we´ll be trading this news based on after-news Retracement Trading Method.

The Market

Once again market is expecting momentum in the private jobs sector as it is reflected in today’s estimate on the ADP report. With Friday´s NFP expected at around 91K, today´s ADP report at best could come inline with market expectation… however, with Manufacturing PMI showing a surprising low reading of 50.9 v 55, traders will definitely pay attention to the upcoming ISM N0n-Manufacturing PMI along with this release for more hints on Friday’s NFP…

Additional Thoughts

The ADP NFP Employment Release is always considered as a high impact release because ADP is the largest private payroll processing provider in the U.S., traders in general pay more attention to this release, especially during NFP week. ADP usually releases its version of Non-Farm Payroll numbers before the actual NFP based on it´s proprietary private payroll data.

This release could start a pre-news trend for Friday´s NFP. Pay attention also to both ISM PMI’s alone with Monster’s Index & Challenger’s Job Cuts report for a complete picture.

Pre-News Consideration

There should not be much pre-news trading opportunities for this release.

by Henry Liu