Welcome to another US Non-Farm Payroll report.
In the previous review, we noted that two hours prior to the release of data, the currency pair was already dropping. Regardless if it was because of the G20 meetings happening on that day or if any NFP data was "leaked", the drop was intensive and this is why i include two hours before the NFP and the four hours after in my reports.
While it remained an increase, we must remember that this contains the figures from the temporary employment of census workers by the government.
Let us now take a look at the Jul 10 US NFP.
Once again, two hours before the report was released, the currency pair was already moving upwards. This continued a momentum since mid week as the continued poor data from the US drove investors away.
The NFP turned out worst than expected, marking a loss of jobs. The "boost" by the temporary census workers is waning off ". This definitely spooked the investors and everyone was risk averse. Having said so, where was the risk aversion then? As i said earlier, this continued a momentum that the US recovery is faltering and hence a poor NFP confirmed this further and investors in their knee jerk reactions definitely rushed to sell their US Dollar faster than you can say " What the *** ??"
The low and high of the NFP was almost 100 pips and this flip flop could have threatened any margin calls excessively risked.
While the unemployment rate dropped to 9.5% due to the shrinking labor force, this percentage remains high and will definitely remain a drag to the US economy. Towards the end of the day, the currency pair eased towards the pre NFP levels after the initial knee jerk reactions wore off.
Trading during the NFP is probably not a wise choice.
Trade safely.
Related Forex Articles from the Koala Forex Training College.
- The US Non-Farm Payroll and the EUR/USD
- The US unemployment crisis
- Risk aversion in forex.
- The story of a margin call. Tom.
