The USD is getting stronger, sorry Ruble

As safe havens find strong support, we have the ultimate trade this week.

The NFP will trigger faster than expected interest rate hikes, supported by the Ukrainian conflict and spiralling inflation, time to take action.

What is this NFP?

The NFP, is the the number of jobs lost or created from the previous month in the US, usually announced on the 1st Friday of each month.

Why important.

  1. The US economy is the largest in the world, this report is a lagging indicator, the effects will trickle down.

  2. The Federal Reserve will gauge the information to decide their future policies.

  3. It will have an impact on the value of the Dollar, therefore impacting the global market.

  4. It will have and impact on future monetary policy mixed in with next weeks inflation report.

  5. It will impact all of us, in terms of future interest rate decisions, yes, do you remember interest rates?

As a result, many analysts, traders, funds, investors and speculators anticipate the NFP number and the directional movement it will cause. With so many different parties watching this report and interpreting it, even when the number comes in line with estimates, it can cause large rate swings.

Analysing the non-farm report number Like any other piece of economic data, there are several ways to analyse and therefore trade the U.S. non-farm payroll number:

  • A higher payroll figure is good for the U.S. economy. This is because more job additions help to contribute to healthier and more robust economic growth. Consumers who have both money and a job tend to spend more, leading to growth. As a result, foreign exchange traders and investors look for a positive addition of at least 100,000 jobs per month. Any release above—let’s say 200,000—will help to fuel U.S. dollar gains. An above-consensus estimate release will have the same effect.

  • An expected change in payroll figure causes a mixed reaction in the currency markets. Forex investors witnessing an expected change in the NFP report will turn to other sub-components and items to gain some sort of direction or insight. This includes the unemployment rate and manufacturing payroll sub-component. So, if the unemployment rate drops or manufacturing payrolls rise, currency traders will side with a stronger dollar, a positive for the U.S. economy. But, should the unemployment rate increase, manufacturing jobs decline, investors will drop the U.S. dollar for other currencies.

  • A lower payroll figure is detrimental for the U.S. economy. Like any other economic report, a lower employment picture is negative for the world’s largest economy and the greenback. Should the NFP report show a decline below 100,000 jobs (or a less-than-estimated print), it’s a good sign the U.S. economy isn’t growing. As a result, Forex traders will favour higher-yielding currencies against the U.S. dollar.

Trading news releases, fundamentals. Trading news releases can be very profitable, but it is not for the faint hearted. This is because speculating on the direction of a given currency pair upon the release can be very very volatile. Fortunately, it is possible to wait for the wild rate swings to subside. Then traders can attempt to capitalize on the real market move after the speculators have been wiped out or have taken profits or losses. The purpose of this is to attempt to capture rational movement after the announcement, instead of the irrational volatility pervading the first few minutes after an announcement. The release of the NFP generally occurs on the first Friday of every month at 8:30 a.m. EST. This news release creates a favourable environment for active traders because it provides a near guarantee of a tradable move following the announcement. As with all aspects of trading, whether we make money on it is not assured. Approaching the trade from a logical standpoint, based on how the market is reacting, can provide us with more consistent results than simply anticipating the directional movement the event will cause.

Some key considerations include:

Is the data already fully factored into the price of an asset or only partially priced in?(you will often get a surprise)

Did we already expect the results and the market already moved accordingly?

Does the data match market expectations?

Is the data as expected, if so, no real change, if better or worse, bigger volatility, sharp quick price variations?

Understanding these differences in market expectations is crucial to success when using a fundamental trading strategy.

Which pairs to trade?

Due to the war in Ukraine the USD is very strong, it is called the safe-haven currency. as well as the safe-haven CHF & JPY

We also have increased inflation and growth of the US economy, prompting the FED RESERVE to increase interest rates faster than factored.








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