How to Trade the US Jobs Report

How to Trade the US Jobs Report

All eyes are on the US Jobs Report today. The event will likely have a notable impact on the markets, but it will be a little bit tricky, given the fact that we had multiple economic releases over the past few days and weeks, which showed mixed outcomes. 

Today's jobs report will give the Fed new information about the employment situation, which is directly linked with the possible QE tapering decision later this year. 

Why is NFP tricky this time? 

For the past few days/weeks, multiple economic releases disappointed and showed that the US economy might not be as strong as previously believed. The ADP Non-Farm Employment Change came in 50% less than expected, while the jobless claims showed a mild increase. The ISM Manufacturing Employment Component declined for the first time in four months, which has a notable factor in NFP reports.

Screenshot_1.png

The trickiness of today's jobs report will be from the unemployment rate and the participation rate. Declining unemployment rate is not always linked to higher employment. Sometimes it is linked to lower participation rate, which pushes the unemployment rate lower. 

How to read the data? 

First, traders need to look at all the actual data, not only one number. Non-Farm Employment Change, Unemployment Rate, Average Wages, Participation Rate, Manufacturing Payrolls, and Private Payrolls. These are the components of the NFP report. It is not about one single dataset, it's all the above. 

Higher readings and higher revisions would be the best scenario to trade, as it will be a one-way bet, just like what happened in last month's report, and this is what the US Dollar needs for now. This would also be welcomed by the Federal Reserve. 

On the other hand, a disappointment would be considered as another reason for the Fed to delay tapering. In return, the US Dollar may continue declining, while equities will celebrate the continuation of the current QE. 

Screenshot_10.png

Finally, mixed data outcome is also possible, this is when we turn our focus to inflation components, including Average Wages, including MoM and YoY. Higher data would keep the estimates for a possible QE tapering before the end of the year. If so, equities might be hit hard ahead of the weekend. 

When to place your trades? 

The most important thing to do once the data is out, DO NOT react to the initial move. The initial move is always tricky, and it doesn’t mean a continuation or even a trend. Most of the time it’s a short-term play before the trend resumes. Therefore, look at the data first, wait for a pullback/retracement before placing your trades. Here I would like to ask you to watch our previous NFP live coverage on YouTube and watch how we always wait for the trade to come to us rather than chasing the moves. 

TRADE NOW

Similar

Markets Ahead of Fed Meeting
Markets Ahead of Fed Meeting

That day has come, guys! The Fed will hold a meeting at 21:00 GMT+3. It can be a highly impactful event. The markets expect the bank to hint about the timing of tapering. 

Key Market Driver: FOMC Statement
Key Market Driver: FOMC Statement

The FOMC, a committee within the Federal Reserve, will hold an important meeting and press conference on September 22 at 21:00 MT time (GMT+3).

Latest news

German Ifo Business Climate
German Ifo Business Climate

Germany, the leading economy in the Euro Zone, will reveal one of the key economic indicators – German Ifo Business Climate on September 24 at 11:00 MT time.

Deposit with your local payment systems

Be on top of your game

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

Beginner Forex book

Beginner Forex book will guide you through the world of trading.

Beginner Forex book

The most important things to start trading
Enter your e-mail, and we will send you a free Beginner Forex book

Thank you!

We've emailed a special link to your e-mail.
Click the link to confirm your address and get Beginner Forex book for free.

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera