Looking into this week's fundamental developments we can see and sense that the USD is kind of in trouble. While ADP NFP data disappointed and weekly unemployment claims came worse than expected the game was on from the non-voting FOMC members about the rate hike and other comments which kind of acted as an indirect USD exchange rate intervention from the Fed.
Although the ADP NFP figures are not directly correlated with the actual NFP figures, often it acts as a sneak-peak. One thing which has caught my attention is the fact that not only the ADP NFP figures came below the expectations but also the previous data was lowered / corrected from 200K to 194K which marks slowdown in the employment data. Meanwhile, the weekly unemployment claims data was also a disappointment 274K vs. 261K of forecasts.
Main factors for the upcoming data announcement will be the following:
- Average number of working hours
- Average hourly earnings
The above two factors are as much as or even more impactful than the actual non farm payroll data. The logic is simple, since many government entities have been creating intensives for those hiring, enterprises are going smart these days, cutting from average weekly hours of their current employees and hiring new ones, while the economic impact is next to zero. Thus, the average number of working hours decline, while the number of new job opportunities increase, investors see this as an opportunity to sell the USD. Similar viewpoint is also applied to the average hourly earnings data.
Gold bulls on the horizoon
We are holding on to our Gold positioning as we have discussed earlier this week. Nonetheless, we are convinced that the valuable metal is likely to bounce up after hitting its support at 1253 level. You can see the targets, stop loss and exact entries in the how to trade non farm payroll data video analysis.
NFP trading strategy
We also should consider using our low risk NFP trading strategy as well. NFP trading strategy is only applied on M1 time-frame and involves Fibonacci as well as 20 minute simple moving average.
The trade set up is quite simple:According to Yagub Rahimov's NFP trading strategy, market needs to move at least 65 pips within the first 30 minutes of the news announcement as the first requirements. You are not allowed to make an entry for the first 30 minutes.
After 30 minutes, if any minutely candle breaks above (in bearish market) the 20 minute moving averages, we draw Fibonacci from the lowest low of the market to the highest high of the market for the last 30 minutes and look for 61.8% as our TP target while SL becomes 5 pips below the lowest low.
You can watch the complete demonstration of my NFP trading strategy on the video above. Just don't forget to sign up to AtoZ Forex youtube channel.