Welcome to another review of the monthly US Non-Farm Payroll event. This is a highly risky and unpredictable economic event and i usually stay out of it. Many folks suffer a margin call during such events due to excessive risk taking.
In the previous review, we noted that the January US NFP came out to be less than expected. However it remained positive and the unemployment rate dropped to 9.4%. This resulted in a wild volatile trading session for the rest of the day.
Looking at the EURUSD 5 minutes chart above, we can see the initial knee jerk reactions of traders and investors as the US Non-Farm Payroll came out lower than expected again. With a range of almost 100 pips in the first 10 minutes, positions either way with tight stop losses would have probably been cleared.
After the initial reaction, the currency pair started to turn bearish as the drop in unemployment rate to 9% was welcomed by many as a sign of an improved US employment market. US Dollar demand rose and US equities were mostly positive. Notice that the 1.36 line was almost non existent during the event and this goes to show the intensity of currency movements generated by the US NFP.
Many investors are saying that the employment market is or even has already recovered. Speculations are that the US Federal Reserve may reconsider their quantitative easing policies. Personally i believe that we probably would need to see a sustained positive data from the employment market before we can be sure.
Trade Safely.
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Related Forex Articles from the Koala Forex Training College.
- The US Non-Farm Payroll and the EUR/USD
- The US unemployment crisis
- Forex Mistakes : Picking tops and bottoms
- Tom, the story of a margin call
