Forex News Analysis: 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 205K Previous 170K
ACTION: 260K BUY USDCHF/ 150K SELL USDJPY

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 225K or better release, I´d be looking to BUY USD/CHF (SNB Intervention); if we get a 90K or worse, then I´d be looking to SELL AUDUSD or AUDJPY on risk aversion trades… 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 strong private payroll growth as reflected in the forecast today. With this being the first real data that helps to predict Friday’s NFP, market will probably react sharply to this release if we get a huge surprise, especially if we get a strong figure.

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.