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Tag Archives: non farm payroll

Alot of noise today about the NFP, most banks forecasting a lower number than expectations of 180K, except for Barclays who is bullish at 200K.

History dictated that August was an inaccurate month, with numbers usually lower than forecast 8 out of the past 11 years with more than 50% adjustments later.

I decided to do my straddle on both the EURUSD and USDJPY with the following details: –

EURUSD; Stop if Bid at 1.1240, Spot at 1.1280, SL at 1.1220

USDJPY; Stop if Bid at 103.10, Spot at 103.45, SL at 103.30

As it turned out the NFP was 150K versus forecast of 180K, unemployment inched up to 4.9% versus 4.8%, average hourly earnings was slightly softer at 0.1% versus 0.2% and labor productivity was significantly lower at -0.3% versus 0.2%.

The USD moved higher against the majors initially, but seemed to lack the legs.

Both my trades was triggered, unfortunately, there didn’t seem to be much of a follow through as financial markets digested the data and probably felt that it was relatively unexciting.

I decided to square of my trades as follow; USDJPY at 103.00 and EURUSD at 1.1230.  I am pretty much ALL SQUARE……..no blood!

What a disappointing night, should have gone out partying!!!  Hahahahahaha…….only joking, as professional traders, if there is a trading opportunity we must be in front of the screen, we need to be there, to hopefully, capture the market opportunity.

Done for the week!

Here’s wishing everyone a great weekend.

Even though ADP earlier in the week came in on the money, that is, 179K versus forecast of 171K, there was still an off chance that NFP today could come in stronger than forecast.  Then again, it’s the summer and usually there are more job creations during this period.

I decided to put my straddle trade on the EURUSD and USDJPY at about 8:26pm with the following details: –

EURUSD   –  Stop if Offered at 1.1108, Spot at 1.1138, Stop if Bid at 1.1168 and corresponding SLs at 30bps out.

USDJPY   –  Stop if Offered at 100.80, Spot at 101.18, Stop if Bid at 101.48 and corresponding SLs at 30bps out.

As it turned out, NFP came in very strong at 255K versus expectations of 180K.

Both my trades was triggered.

I squared the EURUSD at 1.1048 for a trading profit of 60bps.

I squared the USDJPY at 101.82 for a trading profit of 0.34.

A pretty good end to the first week of trading in August.

It’s TGIF and I am going to shut down my computer and go meet some friends for drinks!!!

Here’s wishing one and all a great weekend.

I was expecting that the non farm payroll numbers on Friday, October 2nd will be closely watched as a signal for whether Janet Yellen will be raising interest rates this year.  The noise in the media was playing up this event.

I on the other hand, had to make an urgent business trip to KL on Thursday through Saturday.

It was so funny, I was out for dinner in the Subang area where the internet connection is not always the most stable.  I was with a group of business people having dinner.  At about 8:25pm I excused myself from the group saying that I needed a few minutes to catch up with an old friend at the bar.  I went up to this lady at the bar and explained to her that I needed to access the fx markets on my Iphone and that I would be most grateful if she would pretend that we were long lost friends and keep me with her for about half an hour.  She hugged me and started acting up the role…………TOTALLY SURPRISED ME.

It’s terrible trying to do an fx trade on an Iphone, the screen is small and at the back of my head was the worrying fear that I may lose connection anytime.

I decided to do a straddle on the GBP and EUR: –

EURUSD  –  Stop if Offered; 1.1130, Spot; 1.1163, Stop if Bid; 1.1190

GBPUSD  –  Stop if Offered; 1.5120, Spot; 1.5150, Stop if Bid; 1.5180

As we all know, the non farm payrolls came out way below expectations of 201K at 142K, but what was more surprising that the markets reacted negatively was the adjustment to the previous month down to 136K from 173K.  I don’t know how this will affect the running average, but for the time being, it’s SELL USD.

By this time, I already knew this lovely lady’s name, Cassandra and she was watching the fx markets with me on my Iphone, totally fascinated and what was happening in front of her eyes.

As it turned out the EUR popped up aggressively, the GBP was more of a roller coaster ride.  Cassandra was getting so excited grabbing onto my hand, screaming, wanting to know when I am going to get out of the trade.  She was quite distracting!  My group  who was watching from the other end of the restaurant was wondering what was going on.

At about 8:50pm, I decided to square off the trades in fear that the whole thing may get out of hand and also the fear that I may lose internet connection.

Squared the EURUSD at 1.1291 and the GBPUSD at 1.5216 for a trading profit of 101bps and 36 bps respectively on $10Bn trade size each.

Cassandra kept on screaming and grabbing onto me while I was trying to get out of the trade, really, you need a very strong resolve to focus and concentrate when you have a beautiful woman distracting the hell out of you.

I thanked her for helping me out, ironically, she thanked me as she said she never experienced something like this ever before, she whispered in my ear that she had an orgasm.  I burst out laughing and she blushed.

I returned to my group and they were all drilling me on what the F_ _ _ happened at the bar.  I just told them that my old time friend was excited seeing me after a 10 year lapse.

My blog followers have been asking me whether I hooked up with Cassandra again later in the night?  Yes……………and that’s another story……….PG.

This week is going to be an interesting week, not just because it’s ADP and non farm payroll numbers come Wednesday and Friday, more importantly, it’s a ‘hazing’ week by the many FOMC members who will be talking in the media from Yellen, Fischer, Williams, Dudley, Evans, Bullard and Kocherlakota.

Since, we all know to be American is to be able to stay what you feel and think, there will ultimately be a confusion of views and opinions.  We already know that there are some FOMC members who are pushing for raising interest rates and there are those who want to push-off a rate hike till later.

Former Secretary of the Treasury, Larry Summers is advocating a rate hike only in 2016.

Earnings in corporate America is flat, equity prices fueled by high P/Es, thanks to cheap monies.  Same situation in China but only worse, why, because the government is fanning the bubble in the equity markets.

People are saying that Janet Yellen is being ‘wishy washy’ in her decision whether to raise interest rates or not.  Her recent remarks in the past FOMC rate decision showed that she is acknowledging the various economic problems faced by the many different countries all over the world.  More importantly, because the USD is the main economic trading currency, any hike in interest rates will make the corresponding currencies in South America, emerging Asian countries look like ‘banana’ monies.  As it is, Indonesian rupiah and Malaysian ringgit is trading at all time lows.  The Brazilian real has collapsed and is poised to fall further.

Trade flows and money flows around the world among countries are so intertwined that it is near impossible for the United States of America to ignore the implications of its monetary policy on global currency markets and trade countries.

Since post FOMC, the USD has been strengthening against all majors and is killing emerging currencies.  I attached the Fibonacci charts for GBP, EUR and AUD.

auusd_fibo

eurusd_fibo

gbpusd_fibo

Looks like the majors are all trading at their low ranges, below or about at the 23.6% level.  This could mean a possible bounce back up against the USD if there is any negative noise about the USD.  And with so many FOMC members talking this week, volatility could potentially rise.

Let’s see.

Let’s all stay on our toes, shall we?

Given that the Federal Reserve is poised at raising interest rates this year as stated by Janet Yellen, clearly, all eyes are on employment data, GDP growth and consumption.

Today’s non farm payroll numbers is strong or weak will be a market mover.  Wednesday’s ADP was an indication though a marginal one.

I decided to place my bets on a strong non farm payroll number and did a stop if offered sell EURUSD and GBPUSD with the following at 8:20pm: –

EURUSD  –  Spot at 1.1222, Sell Stop if Offered at 1.1190

GBPUSD  –  Spot at 1.5329, Sell Stop if Offered at 1.5300

The non farm payroll number came out strong at 280K verusus expectations of 222K.

EUR and GBP crashed.

I squared my positions half an hour later at 1.1100 and 1.5238 for a trading profit of 90bps and 62bps respectively.

Not bad!

eurusd 7 june 2013

 

gbpusd 7 june 2013

After last night’s spectacular moves by the EUR and GBP averaging more than 190bps, the current spot is at the 50% retracement level.  The market can now make very violent swings given the current volatility.

While I am of the opinion that the non farm payroll numbers will probably disappoint given the earlier poor showing of the ADP numbers, we are going into Spring and the start of new job placements.  On the off chance, that the non farm payroll numbers coming in stronger than forecast, we should see USD powering back against the EUR and GBP.

Volatility in equities and forex are high right now, and hedging through the options or CFD market is very expensive.

If one is being prudent to potentially capture either the upswing or downswing, buy a call/put spread option would be a safe bet, as one would WIN either way.  However, the cost of the spread option till Monday 10 June is a hefty 114bps.  So is it worth it?  NO.

Which means, one will have to take a gamble on one side.  My advice is to place a stop loss as it is our only protection.

I am deciding to stay out of the market today and instead, spend time with my wife going to the spa and a nice dinner.

Here’s wishing all of you a great weekend.  Remember, in the forex market there is always another day of opportunity, so if you don’t feel comfortable…….don’t push yourself.