Week in Review: NFP to the rescue - Orbex Forex Trading Blog (2024)
Fundamental Analysis
By Orbex
The markets saw another rough week and this time, the US Dollar was at the mercy of the markets. Continued weak and slow economic data from the US saw investors eventually hit the sell button on the US Dollar, which fell to October lows of 96.25. Weak ISM manufacturing data, which is now into the fourth month of declining below the 50 level which marks a contraction, was more than enough of a reason for the markets to scale back their bets. As a result, losses in the US Dollar increased by Tuesday. Most of its peers, the AUD, JPY, EUR, NZD, GBP, CAD and the CHF posted strong gains in a one-day rally which saw the USD peers gain by over 2.0% on average. It was but an obvious move as we noted earlier this week in the weekly preview that US economic data would gain more attention as it signals US economic healthy after the rate hike in December 2015.
The markets, however, turned around after Friday after the January jobs report showed the US unemployment rate falling to a 7-year low of 4.90% with a modest pickup in average earnings which increased 2.50% above estimates of 2.0%, with the previous month being revised higher to 2.70% annualized. The monthly payroll change was, however, weak as was anticipated by the markets. Jobs grew at a slower pace of 151k, falling below estimates of 190k while previous month’s numbers were revised lower from 292k to 262k.
[Tweet ” The US unemployment rate falling to a 7-year low of 4.90% “]
This week also saw the Bank of England and the RBA’s monetary policy decisions. Both the Central Banks held rates steady at 0.50% and 2.0% respectively. However, the RBA’s statement was dovish as China continues to worry the Australian economy, whose trade balance numbers released during this week showed a stronger than expected deficit on falling exports to China. Data was also weaker by Friday with retail sales staying flat. AUDUSD which touched a new monthly high to 0.724 soon gave back some of its gains by Friday’s NY session. The Kiwi, on the other hand, was the top performer with NZDUSD testing a 3-week high to 0.675. The NZD found support on rather hawkish comments from RBNZ’s Wheeler and better than expected quarterly unemployment data.
The Bank of England’s monetary policy was a non-event if not for the MPC votes, which was unanimous this time with the previous dissenter, Ian McCafferty also voting to keep rates steady after nearly 5-months of voting for a rate hike. GBPUSD rallied strongly to trade near 1.465 before turning lower after the BoE’s MPC mandate and the economic forecasts which were very subdued.
From the Eurozone, the single currency obviously emerged stronger this week. Views from ECB officials were rather guarded this time around with ECB’s Mersch noting that the ECB is keeping all its options open and nothing was decided yet. Draghi had two opportunities to speak this week and did not reference much on what the ECB will do in March. EURUSD hit a high of 1.12 before the NFP release.
The Yen was the talk of the town this week as USDJPY erased all the BoJ led gains from the previous Friday. USDJPY fell back to 116 before managing to stabilize higher. The market moves questions the Central Bank’s policy on monetary easing. The Yen held on to its gains despite some BoJ officials coming out strongly noting that rates could fall as much as -0.20% from the current -0.10%, but the markets did not heed much.
The commodity markets managed to post gains this week too, with Gold leading the lot. Gold prices touched $1160 this week, last seen in October 2015, as strong risk aversion sentiment led by a weaker US Dollar managed to propel the Gold to new heights. Oil prices which were wobbly for the most part on comments and rumors from various OPEC countries were volatile but looks to be closing the week flat. WTI Crude Oil is trading at $31.6 a barrel at the time of writing, after initially rallying to above $33 after posting an intra-week low to $29.45
Before the release: If you place a trade before the figure is revealed, you are using your skills of deductive reasoning to predict which way the market will go before it actually does. ...
After the release: Trading after the release is a little more cautious, but also comes with its own set of risks.
How to Actually Trade News? The most common way to trade news is to look for a period of consolidation or uncertainty ahead of a big number and to trade the breakout on the back of the news. This can be done on both a short-term basis (intraday) or over several days.
What's a Pip? A pip is the smallest whole unit measurement of the difference between the bid and ask spread in a foreign exchange quote. A pip equals 1/100 of 1%, or .0001. Thus, the forex quote extends out to four decimal places.
The foreign exchange (forex or FX) market is a global marketplace for exchanging national currencies. Because of the worldwide reach of trade, commerce, and finance, forex markets tend to be the world's largest and most liquid asset markets. Currencies trade against each other as exchange rate pairs.
Consequently, NFP trading can be risky. For this reason, many traders choose to stay out of the markets around its release. Those that do decide to trade should ensure they have proper risk and money management strategies in place.
The NFP impacts currency pairs that include the US dollar the most, so major pairs, such as the GBP/USD, EUR/USD, AUD/USD and USD/JPY see the highest trading volumes before, during and after the release of the report.
How does NFP data affect forex? NFP releases have a general tendency to cause large movements in the forex market. If the Fed decides to lower interest rates to combat high unemployment, it reduces demand for the dollar, causing it's the dollar's price to fall.
Trading signals are generated either by a human analyst or trader or an automated platform supplied to a subscriber of the Forex signal service. Forex signals offer advantages as they allow traders to make a profit while still gaining knowledge about the world of trading with currencies.
We open a position size of 10,000 units and calculate the pip value as follows: 10,000 (units) x 0.0001 (one pip) = $1 per pip. When you open a position of BUY and the market acts in your favor every pip movement will earn you $1.00 and the visa versa is true if you SELL.
However, if you're trading a different currency pair with a different exchange rate and pip value, the number of pips required to make $100 would vary accordingly.
The estimated total pay for a FX Trader is $200,121 per year in the United States area, with an average salary of $120,519 per year. These numbers represent the median, which is the midpoint of the ranges from our proprietary Total Pay Estimate model and based on salaries collected from our users.
While there are many pairs you could trade for most traders, it is best to stick to one to five pairs and become an expert. There is always a temptation to change markets when making losses. Other forex pairs can appear to have stronger trends, higher volatility, and easier-to-make profits.
Nonfarm payrolls (NFPs) are an important economic indicator related to employment in the U.S. Data released on NFPs can be a catalyst for trade in foreign exchange trades based on changes in employment. Technical analysis can be employed in the NFP report using 5 or 15-minute chart intervals.
The method is simply to avoid unprotected intercourse during cycle days 8 to 19. Standard Days is the easiest method to teach, and it requires the fewest days of alternative contraception or abstinence. Only women who have menstrual cycles that are 26 to 32 days long are candidates for this method.
In the minutes surrounding the NFP data release, the forex market can experience high levels of volatility and erratic price movements. Traders should be prepared for this and have a clear plan in place. It's important to remain calm and avoid making any impulsive trading decisions.
The 2 main types of natural family planning involve: tracking periods to see when you're most fertile and avoiding sex or using condoms on those days (fertility awareness method) breastfeeding your baby for up to 6 months to delay ovulation (lactational amenorrhoea method)
Introduction: My name is Carlyn Walter, I am a lively, glamorous, healthy, clean, powerful, calm, combative person who loves writing and wants to share my knowledge and understanding with you.
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