Forex Analysis For US ADP NFP Employment

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 91K
ACTION: 150K BUY USD/JPY / 50K BUY GBP/USD

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 (based on recent BOJ Intervention); if we get a 50K or worse, then I´d be looking to BUY GBP/USD (based on recent GDP release)… I will also recommend to look at my strength meter and find the best currency against the USD pending the actual data.

The Market
Once again market is expecting a moderate private payroll growth as reflected in the forecast today. With FOMC meeting announcement just hours away, market will be in a holding pattern unless we get a strong surprise.  With last NFP release surprised the market and eased concerns for a double-dip recession, today’s release will definitely be widely watched for hints on Friday’s official NFP release.

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.