Trading The U.S. ADP Nonfarm Employment Change, August 31, 2016

US ADP NFP Employment Change is a preview to Friday’s BLS employment report, and considering recent positivity on further rate hikes, a stronger reading should most definitely support that rhetoric.

8:15am NY Time US ADP NFP Change Forecast 173K Previous 179K Deviation: 50K (BUY USD 223K / SELL USD 123K)

The Trade Plan

I usually don’t trade this release but I use it for future trend references. However, if the deviation of 50K is actually hit, the market probably wont have a problem pushing it, and this will undoubtedly change market perception for the NFP release; therefore its best to be around your computer during the release time rather than find out what happened hours later and potentially miss the entire movement.

With the above being said, we’ll be looking for a deviation of 50K, so if we get 223K or better release, I’d be looking to BUY USD against the weakest currency based on the strength meter; if we get a 123K or worse, then I’d be looking to SELL USD against the strongest currency based on the meter…

I’d recommend to use the Recommended Pairs as they are based on my CSM and should give you the best combination of currencies to trade in the event of a better/worse news… of course, you can always trade the default pair for this release: EUR/USD.

Outlook Score

Outlook score is derived from market sentiment, focus, and economic indicators for the currency. It represents the long-term trend of the currency and its market perception. In short, a strong Outlook Score means more long-term demand for the currency, and a weak Outlook Score is the opposite.

Definition: ADP Employment report was developed and is maintained by Macroeconomic Advisers, LLC. It is a measure of employment derived from an anonymous subset of roughly 500,000 U.S. business clients. During 2011, this subset averaged about 344,000 U.S. business clients and represented over 21 million U.S. employees working in all private industrial sectors. The ADP NFP report is a monthly estimate of private nonfarm employment among companies in the United States with 1-49 employees and is a subset of the ADP National Employment Report. The data for both reports is collected for pay periods that can be interpolated to include the week of the 12th of each month, and processed with statistical methodologies similar to those used by the U.S. Bureau of Labor Statistics to compute employment from its monthly survey of establishments. Due to this processing, this subset is modified to make it indicative of national employment levels; therefore, the resulting employment changes computed for the ADP National Employment Report are not representative of changes in ADP’s total base of U.S. business clients.

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