A review of Friday's US Non-Farm Payroll economic announcement

     
article by thegeekknows.com (except where indicated by ***)

The first US NFP of the year and surprises it did bring indeed. I hope no one suffered a forex margin call.

In the previous US Non-Farm Payroll, the EUR/USD experienced a range of almost 200pips. This is enough to deal a devastating blow to anyone excessively risked on the wrong side of the trade. Furthermore due to the fake consolidations, anyone trying to catch a top would probably be wiped out too.


Looking at the EURUSD chart above, the US NFP did bring us a surprise. Firstly there is a small forex gap. This is due to the extreme knee jerk reaction experienced when the data was released. ***(not all traders experienced this gap, my LiteForex trading platform had no gap)***

The US Non-Farm Payroll came in less than expected. Coming in at 103k versus the estimated 159k. While it still presented a gain in jobs, the increase fell short of the already moderate estimates. Investors probably saw this as a sign of the troubled US employment market.

The EURUSD was ranging wildly and this had the potential to wipe out trading positions on both sides. ***(traders who use the sure-fire forex hedging strategy had a good day!)*** This was probably caused by the unemployment rate falling to 9.4%. Investors were caught between the optimism of a superficial fall of the unemployment rate and the stark reality that the unemployment rate remains critically high above 9%. Trying to pick tops and bottoms is an extremely risky trading style.

The pessimistic sentiments were further increased during the testimonial session by Mr Bernanke as he mentioned the fact that the unemployment problem will probably be a critical concern for some time to come.

The pessimistic sentiments probably led to a build up of risk aversion and hence saw the EUR/USD dipped below 1.3 eventually.