US Nonfarm Payroll (NFP) Employment June 1, 2012 News Analysis

We'll be trading the US NFP (nonfarm payroll) Employment Change, it is the focus news release for the week. Here's the forecast:

8:30am (NY Time) US NF Employment Forecast 150K Previous 115K
8:30am (NY Time) US Unemployment Rate Forecast 8.1% Previous 8.1%
Deviation: 70K  (BUY U SD 220K / SELL USD 80K)

The Trade Plan
Today's NFP Employment Change release is forecasted at 150K. The Unemployment Rate is expected to remain at 8.1%. If we get a significantly lower release on the NFP (80K or worse) and slightly higher Unemployment Rate (8.2% or more), I'd be looking to SELL the USD against stronger currencies. On the other hand, if we get a positive NFP release (220K or better) and the Unemployment Rate remains at or below 8.1%, USD should strengthen immediately and I would BUY USD against other weaker currencies (use CSM or recommended pairs above)

If we get a conflicting release, then we'll wait and see how the market reacts first. If there is an overwhelming sentiment driving the market, well get plenty of opportunities for an entry if we just wait for 5 minutes after the release; you´ll get a much clearer view.

NFP Trading Strategy
Let's talk about how to trade this release: We'll wait for the numbers to come out but continue to hold on a trade, Even if we get our tradable figures (220K to 80K). Wait for a possible revision of the previous release number of 115K as the market usually overreacts with the Revision and chances favor that a solid trade will present itself if we dont get a conflicting releases between the revision and the actual release; at this point, still stay out of the market.

Then the next step is to wait for the Unemployment Rate, which is expected to remain unchanged at 8.1%. If the Unemployment Rate were to surprise higher, were faced with an imperative decision at the time of the release.

Then the next step is to wait for the Unemployment Rate, which is expected to remain unchanged at 8.1%. If the Unemployment Rate were to surprise higher, were faced with an imperative decision at the time of the release.

After all of the numbers have been released, wait for the market to push and wait patiently for a decent retracement before getting in. Look for recent support/resistance areas for entry as high impact news with various components is extremely volatile, and those who are patient will always get a chance to enter with a much better entry.

DEFINITION
Measures the change in number of employed people during the previous month, excluding the farming industry. A rising trend has a positive effect on the nation's currency. Job creation is an important indicator of economic health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises.