Welcome to another review on the US Non-Farm Payroll. Th US NFP is an important economic event due monthly and often cause volatility in the currency exchange markets.
The previous US NFP in March brought about a positive increase in employment. This was seen by many as an indication of improving labor market conditions. Furthermore the unemployment rate dropped, sending the market into an optimistic overdrive.
Looking at the EUR/USD 5 minutes chart above, we note a huge range of currency pair movement for the EUR/USD. The US Non-Farm Payroll brought about a dip as low as 1.4060 followed by a bullish push above 1.42 hours later.
Clocking a higher than expected employment gain, the sentiments were strong in favor of the US economy. To add on to the positivity, unemployment rate fell too and is currently at 8.8%. Another 0.1% away from the dreaded 10%.
Some new traders may wonder why did the currency pair reverse the dip since it was a good development for the US economy. My personal take on this is that the initial dip was the knee jerk reaction of investors and traders who hopped on to the US Dollar train on seeing the good economic data. When the initial kick settles down, the usual positivity brought about increased risk taking and hence lower yielding currencies such as the US Dollar got sold in exchange for higher yielding currencies such as the Euro. Hopefully no one was caught excessively risked on the shorts.
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