On Friday 03-06-09 at 8:30 AM ET, the USD Non-Farm Employment Change and USD Unemployment Rate reports will be released for the month of February.
The previous USD Non-Farm Employment Change and USD Unemployment Rate reports came out on Friday 02-06-09 at 8:30 AM ET.
In the past, only the USD Non-Farm Employment Change affected influence on the U.S. economy, but now, under the current economic conditions, the USD Unemployment Rate is influencing the economy and the currency market.
The USD Non-Farm Employment Change report released in February, for the month of January, was set up as follows:
Previous Report: -524K – up from -577K (revised) December report.
Economists Forecast: -530K – not an economic improvement.
The actual report: -598K – lower by 68K – not good for the USD
The USD Unemployment Rate report released in February, for the month of January, was set up as follows:
Previous Report: 7.2% – (not revised)
Economists Forecast: 7.5% – not an improvement.
The actual report: 7.6% – not good for the USD
The USD Non-Farm Employment Change report for October, November, December and February “previous” reports have been “revised” just a few minutes after the actual report release. No revisions for the USD Unemployment Rate.
The “revisions” could have an effect on the currency market – but I have not seen it yet.
I monitored 4 currency pairs during the February USD Non-Farm Employment Change and USD Unemployment Rate report and here is what happened:
EUR/USD – moved down about 25 PIPS first minute – then reversed up about 55 PIPS in 3 minutes – right direction
GBP/USD – moved down about 28 PIPS first minute – then reversed up about 60 PIPS in 3 minutes – right direction
USD/CAD – moved down about 25 PIPS first minute – then reversed up about 35 PIPS in 3 minutes – right direction
USD/JPY – moved down about 20 PIPS in one minute – right direction reversed up about 75 PIPS in 8 minutes – wrong direction
The USD Non-Farm Employment Change for this month’s release (a report on February Employment change) has a “forecast” of -636K, an increase from -598K.
If the “actual” USD Non-Farm Employment Change report comes out less or more than the “forecast” by a large amount, say 50K or more, this would be a huge surprise for FOREX traders and the market may move considerably in the following minutes of the report.
So, let’s set this up:
The February “previous” report= -598K
The economists “forecast” this month= -636K – a huge change!
If the “actual” report comes out -686K or more, this will be real bad for the USD, and a big surprise for traders. A currency pair using the USD could see the market move against the USD.
However, if the “actual” report comes out at -548K or less, this would be good for the USD and again, a big surprise for traders. A currency pair using the USD could see the market possibly move in favor of the USD.
The USD Unemployment Rate is forecast at 7.9%, up from 7.8%.
If the USD Unemployment Rate report and USD Non-Farm Employment Change come out as forecast (the market has already factored in these results), the market should be fairly tame following the report. Unless there is a big revision.
The probabilities set forth above are assuming no unpredictable events are taking place at the same time.
Speeches on the economy by government officials, or a situation somewhere in the world that could have an impact on the U.S. economy – could adversely affect the market.
Sometime after the end of the USD ADP report I will post a results. So, check back!
Friday 03-06-09:
Here are the results of USD Non-Farm Employment Change and USD Unemployment Rate reports:
Looks like more people lost their jobs last month, 4,000 more from the “revised” February report. This report is not good for the USD! And the employment rate is 8.1%, 0.2 % more than “forecast” not good for the USD either!
Here is how it affected the 4 currency pairs I follow:
EUR/USD – moved down about 31 PIPS first minute – wrong direction
then moved up about 124 PIPS in 4 minutes – right direction
moved down about 95 PIPS in 6 minutes – wrong direction
then moved up about 110 PIPS in 45 minutes – right direction
GBP/USD – moved up about 51 PIPS in 3 minutes – right direction
moved down about 45 PIPS in 18 minutes – wrong direction
then moved up about 50 PIPS in 7 minutes – right direction
USD/CAD – moved down about 42 PIPS in 3 minutes – right direction
moved up about 30 PIPS in 9 minutes – wrong direction
moved down about 60 PIPS in 24 minutes – right direction
USD/JPY – moved up about 55 PIPS in 3 minutes – wrong direction
then moved down about 45 PIPS in 5 minutes – right direction
moved up about 90 PIPS in 31 minutes – wrong direction
This is one of those economic reports that has “revisions” that affect the market movement after it comes out. Traders often hesitate the first few minutes after the “actual” report is released waiting for the “revision”.
I have noticed that traders try to refresh the economic calendar they use for information about the “actual” report and the “revision” – I use 2 different calendars, one calendar is just not built to handle the “refresh” feature during the high volume of a economic news release, the other is, so I am able to get the “actual” news release almost the moment it is released and the “revision” which comes a few minutes later.
It seems that the traders were quite erratic the first 3 to 4 minutes after the report release.
It appears the EUR/USD currency pair was the best trade today.
