Hope the title of this post does not mislead anybody. I’m not about to reveal some powerful secret to trade currencies using NFP. Mostly because I don’t have one. But today we witnessed Forex react strongly to job market in US, pretty much like it has been doing so far this year. Employment numbers still rule, causing even bigger price swings than interest rates announcements. And it was not just Forex, most of other financial markets moved as well, with equities getting a lion share of attention.
Obviously, the NFP was disappointing. The number was lower than the prediction and, perhaps more importantly, most of the jobs created were connected to the census, thus not a sustainable employment. On top of that, Hungary announced that its sovereign debt is in jeopardy. The Euro got punished, falling to under 1.2000 against the USD, for the first time in four years. Perhaps even more interesting was the EUR-CHF, which made an all time low of 1.3900. Looks like the SNB is fighting a losing battle there, but that is a story in itself and I’ll expand on it some other time.
For me of most interest were the Yen pairs. I expected them to respond strongly to any surprise. Indeed, Yen got even stronger than the USD, creating very strong price swings. Yesterday the CAD-JPY pair was discussed here, with couple of possible trades outlined. Things didn’t happen as planned, or hoped for, but the end result was positive.
At first, I looking for a possible sell, should the price advance to 89.60 are. It didn’t quite get there, so no trade. Next, selling a down breakout at 88.12 was considered. Unfortunately, that level was reached on initial response to the NFP, so no trade either. Things settled down relatively quickly though, so new sell order could be placed under that minor low, at 87.50. Objective was still 100 pips and it was hit few hours later. Overall, not bad, even if entry was late and I left a lot of pips on the table. Have a great weekend!
Mike K.
Hi Mike,
Where do you put your stop if you sell the low of of a candle?
Other end (like PA trading would suggest)?
Cheers
Thomas
Good trade. I tried to sell at 88.12, original level. My order was slipped 11 pips and I got cold feet during next hour when price movement slowed down. In the end I only made 26 pips and then watched the market collapse. Rough…
What do you think will happen now? Can we expect more of this explosive moves when markets reopen? It is hard to make a decision here, with sentiment always changing. Headlines go from positive to negative in a matter of minutes. And charts are confusisng, too.
Hi Thomas,
Yes, typically it is few pips above the candle. But here it happened above the same candle that entry took place. It is the black candle following the green colored doji. It will be easier to see on smaller time frame. I’ll try to include it in next post.
Maxim, read next post. And yes, using headlines as guides now is difficult.
[...] In a fashion which has been repeating itself recently, CAD was rewarded, since these figures could prove to be enough for the Bank [...]
[...] Reality turned out much better, with unemployment falling to 7.9% and 93,000 of new jobs created. In a fashion which has been repeating itself recently, CAD was rewarded, since these figures could prove to be enough for the Bank of Canada to start [...]