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Question about Non Farm Payroll Movement

  • #1
  • First Post: Jun 6, 2014 11:52am Jun 6, 2014 11:52am
I saw this at ForexLive page.

I am confused on the following lines

May non-farm payrolls 217K vs 215K expected

The market was ready for disappointment but these numbers are solid and slightly better than the consensus.
What’s happening in the market is that this cleared away the main risk hurdle for the euro bulls and that’s causing
a broad US dollar slip with USD down about 20 pips across the board after the numbers.


-----------
I am not sure why non farm payroll that come out as expected is dovish for the USD.

Unemployment rate also remain at 6.3%, anyone can answer why the commentator Adam Button at ForexLive would mention
that the market is looking for disappointment and what is the main risk hurdle for euro bulls

I was forecasting that the result will be as expected and would be usd positive, the forecast was correct but the reaction
went opposite of what I expect it to be.

Hope someone can clarify and explain. Thanks for the knowledge. Please don't tell me market manipulator are manipulating the market

Thanks!!
Learn to Trade is Important. Keep your bias & ego aside.
  • #2
  • Jun 6, 2014 12:18pm Jun 6, 2014 12:18pm
Quoting chaosbun
I saw this at ForexLive page. I am confused on the following lines May non-farm payrolls 217K vs 215K expected The market was ready for disappointment but these numbers are solid and slightly better than the consensus. What’s happening in the market is that this cleared away the main risk hurdle for the euro bulls and that’s causing a broad US dollar slip with USD down about 20 pips across the board after the numbers. ----------- I am not sure why non farm payroll that come out as expected is dovish for the USD. Unemployment rate also remain at...


==> I was forecasting that the result will be as expected and would be usd positive, the forecast was correct but the reaction went opposite of what I expect it to be.

Here is your answer.
  • #3
  • Jun 6, 2014 12:59pm Jun 6, 2014 12:59pm
Quoting Mingary
{quote} ==> I was forecasting that the result will be as expected and would be usd positive, the forecast was correct but the reaction went opposite of what I expect it to be. Here is your answer.
Hi thanks for replying, I just wanna know why it is green in result (as expected and unemployment remain at 6.3%) but the outcome is risk on.
Can you enlighten me on that with your knowledge.
Learn to Trade is Important. Keep your bias & ego aside.
  • #4
  • Jun 6, 2014 5:54pm Jun 6, 2014 5:54pm
Quoting chaosbun
I saw this at ForexLive page. I am confused on the following lines May non-farm payrolls 217K vs 215K expected The market was ready for disappointment but these numbers are solid and slightly better than the consensus. What’s happening in the market is that this cleared away the main risk hurdle for the euro bulls and that’s causing a broad US dollar slip with USD down about 20 pips across the board after the numbers. ----------- I am not sure why non farm payroll that come out as expected is dovish for the USD. Unemployment rate also remain at...
Traders don't necessarily care about the forecasts or the news or they may just have completely different forecasts of their own. Or they may just have different agendas all together. Or to really simplify, more buyers than sellers is why it moved or vice versa depending on the pair
  • #5
  • Jun 6, 2014 6:56pm Jun 6, 2014 6:56pm
Quoting chaosbun
the forecast was correct but the reaction went opposite of what I expect it to be.
The price movement isn't due to the news but to the traders reaction.
MT4/MT5 EAs/Indicators/Alerts coder
  • #6
  • Jun 6, 2014 7:09pm Jun 6, 2014 7:09pm
There is a book called "high probability trading" by Marcel Link. Therein you can read all about trading fundamentals. One important thing is how much a certain release is expected by traders... I am attaching two charts, one of the NFP for the past months and one for the unemployment rate. Notice how everything is according to plan..? Notice how last month there was a larger increase in NFP than expected - the result was a much more bullish USD... To put it bluntly, expected values are priced in days, weeks and months before the actual release. Whenever the outcome is better than expected, new buys occur. Whenever it has worsened, then you can expect to see it go downhill. But as soon as it is all within expectations, within rhythm, and there are no surprises, smart money will usually move out of position (take profit), resulting in a sudden sell-off of the currency in question... Increase in suply means lower price and you know the rest.

I have a theory that the currency market truly shows the actual economy health. Notice how data seems better and better each month, yet foreign debt is increasing by the second? How utterly chaotic the whole scene is, when in fact numbers seem to be showing the economy is doing better? Yeah, that's why a "dollar positive" release tends to bring the USD lower.

Let's not forget that there is the matter of the currency "cross", meaning that there are fundis keeping the eur above water in the particular eurusd case...
Attached Image(s) (click to enlarge)
Click to Enlarge Name: NFP.png Size: 20 KB
Click to Enlarge Name: unemployment.png Size: 18 KB
  • #7
  • Jun 7, 2014 2:57am Jun 7, 2014 2:57am
Quoting chaosbun
{quote} Hi thanks for replying, I just wanna know why it is green in result (as expected and unemployment remain at 6.3%) but the outcome is risk on. Can you enlighten me on that with your knowledge.
It is simply because the market is designed to cause the maximum financial damage to the greatest number of traders/speculators.
  • #8
  • Jun 7, 2014 3:07am Jun 7, 2014 3:07am
Quoting Mingary
{quote} ==> I was forecasting that the result will be as expected and would be usd positive, the forecast was correct but the reaction went opposite of what I expect it to be. Here is your answer.
haha very true!
  • #9
  • Jun 7, 2014 6:03am Jun 7, 2014 6:03am
Quoting chaosbun
I saw this at ForexLive page. I am confused on the following lines May non-farm payrolls 217K vs 215K expected The market was ready for disappointment but these numbers are solid and slightly better than the consensus. What’s happening in the market is that this cleared away the main risk hurdle for the euro bulls and that’s causing a broad US dollar slip with USD down about 20 pips across the board after the numbers. ----------- I am not sure why non farm payroll that come out as expected is dovish for the USD. Unemployment rate also remain at...
The NFP numbers met expectations, where expectations are for continued slow to uneven growth in the US economy. Therefore, had the numbers been south of 175K, then there would have been a change in expectations to the down side and the dollar would fall. Had the number been above 275K, then expectations for the US economy would improve and the dollar would have increased. By meeting expectations, nothing changes, and at the end of the trading day, that is what happened to the EUR/$.
  • #10
  • Jun 7, 2014 8:53am Jun 7, 2014 8:53am
just as mingary has said,news releases and pre release are ideal times for money to hoover up .this weeks first release of employment figures is a perfect example.wendsday I think all though don't quote me on it,prior to release price traded down from the averages 30 to 40 pips,the minutes leading into the release you could see the buying coming in,i had my finger on the buy and hesitated ,bing bang bosh price rose 40 to 50 pips cleared the book and spiked the highs then drifted back to the averages,classic hoover job .the liquidity thins out the spreads open ,ideal hunting grounds.
  • #11
  • Jun 7, 2014 9:39am Jun 7, 2014 9:39am
Quoting WDays
There is a book called "high probability trading" by Marcel Link. Therein you can read all about trading fundamentals. One important thing is how much a certain release is expected by traders... I am attaching two charts, one of the NFP for the past months and one for the unemployment rate. Notice how everything is according to plan..? Notice how last month there was a larger increase in NFP than expected - the result was a much more bullish USD... To put it bluntly, expected values are priced in days, weeks and months before the actual release....
Sincerely thanks for this detailed explanation. Sometime GDP or Retail sales reach as expected and the movement was USD bullish while sometime its is USD muted or USD sell off. So need to understand more about fundamental and its impact. I still got a lot more to learn
Learn to Trade is Important. Keep your bias & ego aside.
  • #12
  • Jun 7, 2014 9:41am Jun 7, 2014 9:41am
Quoting GEfx
{quote} The NFP numbers met expectations, where expectations are for continued slow to uneven growth in the US economy. Therefore, had the numbers been south of 175K, then there would have been a change in expectations to the down side and the dollar would fall. Had the number been above 275K, then expectations for the US economy would improve and the dollar would have increased. By meeting expectations, nothing changes, and at the end of the trading day, that is what happened to the EUR/$.
Thanks for the explanation, I understand that should the result was lets say 250k instead of just meet expectation, somewhere 20-30k above expectation, we could see some USD bullish while hitting expectation yet falling compare to prior release. It should be usd negative. But should it below expectation, we can see stronger risk .

Just because the Forexlive posted something like it hit expectation and is clearing some hurdles of the euro bull. I was wondering if it din't hit expectation, would the initial impact be opposite
Learn to Trade is Important. Keep your bias & ego aside.
  • #13
  • Jun 7, 2014 9:42am Jun 7, 2014 9:42am
Quoting diceman555
just as mingary has said,news releases and pre release are ideal times for money to hoover up .this weeks first release of employment figures is a perfect example.wendsday I think all though don't quote me on it,prior to release price traded down from the averages 30 to 40 pips,the minutes leading into the release you could see the buying coming in,i had my finger on the buy and hesitated ,bing bang bosh price rose 40 to 50 pips cleared the book and spiked the highs then drifted back to the averages,classic hoover job .the liquidity thins out the...
Yeah before the release the price was falling to like 1.3620, then near release it got pump up to like 1.3645 and eventually 1.3677 and then fall again 1 hour later where people probably take profit.
Learn to Trade is Important. Keep your bias & ego aside.
  • #14
  • Jun 7, 2014 9:55am Jun 7, 2014 9:55am
Quoting chaosbun
{quote} Yeah before the release the price was falling to like 1.3620, then near release it got pump up to like 1.3645 and eventually 1.3677 and then fall again 1 hour later where people probably take profit.
the thing with news releases is establishing if the market is waiting for that particular release ,you need to be aware of all the forthcoming releases.this week was a good example,lots of positive numbers coming out of Europe,but the market was waiting for ECB ,so it some what over shadowed the positive euro and gbp releases.

try to establish what news is a market mover .
  • #15
  • Jun 7, 2014 10:00am Jun 7, 2014 10:00am
Quoting diceman555
{quote} the thing with news releases is establishing if the market is waiting for that particular release ,you need to be aware of all the forthcoming releases.this week was a good example,lots of positive numbers coming out of Europe,but the market was waiting for ECB ,so it some what over shadowed the positive euro and gbp releases. try to establish what news is a market mover .
I did think of that, but NFP was probably a market mover too. Just that I did expect it to hit expected, and I was thinking that the market is not moving towards what Draghi wanted. (Probably a lower euro), however the market just keep buying EUR against USD.

My idea was

USD will gain strength when NFP & unemployment rate meet as expected.

The weak currency would probably be EURO & CAD, I did win my USD/CAD but my EUR/USD got killed in the rush, however I open new position at 70 and close at 30 to earn back my losses & make back some extras.

Just that I am confusing why it was risk on when the result was as expected, could only think that people already price it in. Probably like what most people mention here
Learn to Trade is Important. Keep your bias & ego aside.
  • #16
  • Jun 7, 2014 10:03am Jun 7, 2014 10:03am
Quoting Mingary
{quote} It is simply because the market is designed to cause the maximum financial damage to the greatest number of traders/speculators.
What you mention is true also


Should create a thread ask all the retail traders here, what they going buy / sell , get the majority poll , then do the opposite.
or just use oanda open position to do positioning :E
Learn to Trade is Important. Keep your bias & ego aside.
  • #17
  • Jun 7, 2014 10:04am Jun 7, 2014 10:04am
also this angle

you have insider trading or investment firms that do independent research and calculate what the number slould be. Say it will be better. They will be buying big before release and push price up. Once release, price filal jump and they unload and reverse trend.
  • #18
  • Jun 7, 2014 10:15am Jun 7, 2014 10:15am
Quoting seaman2
also this angle you have insider trading or investment firms that do independent research and calculate what the number slould be. Say it will be better. They will be buying big before release and push price up. Once release, price filal jump and they unload and reverse trend.
But there this case of GBP release, when 30 minutes before release, the big guys always seems to know the result earlier.

Price will lets say jump up 30-40 pips. When the actual release come out, it jump another 30-40 pips.

It happen often, especially with GBP news.
Learn to Trade is Important. Keep your bias & ego aside.
  • #19
  • Jun 7, 2014 10:34am Jun 7, 2014 10:34am
The big banks can ALL buy the information in advance
often from Reuters, but also from other sources aswell
so they are n't actually guessing anything - they already know, and its legal

the reaction(s) also usually depend on S/R
ie if price has rallied for a few days before NFP and is at resistance, then regardless of good numbers price can fall, as the profit target for the wk has already been hit
then the News broadcasters usually stop talking about the great numbers and say it must of been priced in,
(as it has been)

and if price is at some support, after a pullback for most of the wk or a spike down to support even if its just a mediocre result price can still rise, for obvious reasons

Obamy gets the NFP data around 5/6pm (est) the day before NFP and then is open to those with the deepest pockets

same for UK GDP data - the UK Chancellor gets the information the day before
presumably its also for sale

(free and fair market for those with huge bags of cash)
  • #20
  • Jun 7, 2014 10:56am Jun 7, 2014 10:56am
If you're talking about UK data check this out..
http://www.bbc.co.uk/news/blogs-maga...nitor-26666191

49 people actually get told the data results the day before.. so I'd say there's a 99.9% chance that it's for sale to those with deep pockets!
(don't know if it's this 49 for all the economic data releases, but think it'll be a similar set up)
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