The October NFP release

The NFP report is a major driver in the U.S economy. Released monthly, the data generates interesting trading opportunities, a treat for investors.

Beginners

12:00 GMT-18:00 GMT
08.10.2017

Mike Roberts

31:07

Webinar Transcript

Hello there everybody. Thank you for joining me. This is Mike Roberts. Sorry, we had a bit of technicality in the beginning of the session. So I am just waiting for the last folks to sign in and we are going to begin in just a moment. Okay everybody. Thank you again for joining me, this is Mike Roberts and this is a live session here at BinaryOnline. The subject of this webinar is the NFP of course that we are going to have tomorrow, very big event coming up tomorrow. Again this is alive session and I apologise again for the technical issue that we had at the beginning of the webinar. Hopefully all the folks that signed in are going to be able to sign in again and hopefully you can all hear me loud and clear. So, let’s start. We got a very big event coming tomorrow- the Nonfarm Payroll. We are going to get the jobs number from the U.S. What we are going to do today, is we are going to cover the main idea behind the NFP and also we are going to go ahead and try to look at the exact tactic and strategies that we can use in this opportunity.

So we are going to define the NFP for those of you who this is the first time trading an NFP.

Agenda:

  1. Defining NFP
  2. Importance of NFP
  3. Trading the NFP
  4. Forecasts
  5. Closing Line

I am going to also again, show you the charts, exactly how to take the trade, what exactly to do, what to look for. So, the NFPs are published every single month on the first Friday and tomorrow is going to be the first Friday of October. By the way, October is a very volatile month in trading, September and October; but this year it’s been absolutely amazing, very low volatility and markets seem to be very confident in Donald trump and policies that we are going to see maybe on the future. So, we are looking at a very stable market, market trading at an all time highs. The Nonfarm Payroll comes in at the first Friday of each month. Again, October, usually a very volatile month. This time it’s kind of stable, also September.

The NFP gives us an indication on the total number of paid workers in all sectors excluding farming business which is seasonal. So, we don’t want to put that in the jobs report and the importance of the NFP, the jobs number is that it give s us an indication of how is the U.S. economy doing ant that is the essence of this report. So, we are going to say alright, either this report is an indication for expansion in the U.S. economy. In that case we are going to see a rise in the USD, a drop in Gold and another rise maybe also in the stock market in Germany, in Europe and especially in the United States. We have stock market on the BinaryOnline Platform, we have the Nasdaq, the S&P and the Dow Jones. On the other hand, if the results of the NFP are bad tomorrow, that’s going to give us an indication for some kind of contraction in the market and in that case, we are looking at a possible drop in the USD. Less demand for U.S. workers, less demand for the currency, maybe even a drop in the stock market. So, that’s going to happen tomorrow and what I do because at the at the end of the day, on the platform, you need to decide if you want to buy a call option or a put option and that decision you guys have to make and it’s easier, you know, the NFP we always see a big reaction in the market and it’s easier to trade when you kind of put it in a call or put perspective. Expansion contraction. There is a possibility where the results are mixed and the reaction from the event is mixed and then you’ve got kind of a choppy movement on the assets. You could even have a sharp movement in the assets where there is just an opportunity for buyers to come in or sellers to come in or something like that; but the idea is that there is a mixed result, it’s much more difficult to understand if the event indicates expansion or contraction and in that case, either you stay on the sidelines, wait for the choppy movements to kind of take advantage of the situation meaning that for example, if you are in a position where there is a choppy market, you see the dollar go up and down, there is not a constant movement because the results are mixed, you can just let that choppy movement by the asset just disappear after sometime. It’s not going to last forever. Choppy movements by assets, they don’t last forever, they last for a minute or two, maybe even a few minutes, but not more than that and then, after that choppy movement is gone, you are going to end up with either a kind of sideway movement by the asset or we are going to see a trend evolve in the asset. That’s kind of, mostly that’s what happens when you have mixed results. So, on a pure expansion move, then I can just, you know start trading my call options on the dollar immediately. On a sharp contraction move, then I can start trading my put options on the dollar immediately and if the results are mixed, then I am going to take a look at the market reaction, let the choppy movement kind of, you know, exhaust itself in a way and then, you wait for the trend to start kicking in. That’s the three scenarios that you have. Usually you got either expansion or contraction. Usually on a mixed result, you can have a mixed result; but we are going to speak about that in a bit. There is a tie breaker mostly in mixed results. There is something that the market prefers better than something else and we are going to see that later in this session. So, that is about expansion and contraction. Now, trading NFP can cause, as I mentioned before, large rate movement, irrespective of the final readings and it creates a favorable trading environment for active traders. So, I mean the trading volume on NFP is huge. We are talking about three or four times more trading volume than a regular day and the main reason for that is because a lot of folks are going to join in, are going to take part in this, try to catch the movement early and take advantage of it. Ok so that’s the environment itself and these are the rules for trading the NFP but I want to go to the financial calendar. This is where you actually get the results of the NPF, on a financial calendar. This is where you actually get the results. […] I use forexfactory.com; but you can use whatever you want. You can use investing.com financial calendar, you can take the financial calendar from Bloomberg, from CNBC of from fxtree.com or from any other website that offers finance news, you are going to get the calendars there. […]

The more jobs created in September, the better it is for the dollar, the more we are in the expansion mode. Less jobs created, we are going into contraction. You know this is what Donald Trump has been saying all of the times since he became president. Even before he’s been saying, you know, I want to create jobs, i’ll create a lot of jobs. Now what is unique about this NFP is the the number of jobs that we are expecting is very low, very very low. We are expecting only 82K jobs on this NFP which is the lowest number in years. […] The question is why is this number so low and this is what makes this NFP so unique. The forecast for the NFP is very low, only 82K jobs and the reason why it’s so low is because of the hurricane. The hurricanes that affected the United States, if it’s the hurricane Harvey in Houston and Maria in Florida, these two American hurricanes have created a huge huge blow to the economy in America and to the job creation in America. A lot of people lost their job, a lot of people were not hired because of this. So the amount of jobs that we are expecting on this NFP is very low. Only 82K jobs and tha means that there is a good possibility that we are going to see a lot of volatility during this event because usually if we get the regular numbers like 150, 170, 200 that’s kind of the average. Since the beginning of the year, the average amount of jobs was 175. All of a sudden we are expecting only 82. So even if we get a number that is close to the average, but not the average, let’s say we get around 140K, that’s going to be a huge positive surprise in the U.S. economy and that could create a big drop in the dollar. All of a sudden if we get a number that is even negative, I mean if we get a number like minus, that means, U.S. economy lost jobs. So, we got a number like 40K or 30K, that can create volatility on the opposite way. We can see a big drop in the dollar. We don’t exactly know how the results are going to turn up because of the hurricanes making this event very very interesting. So the opportunity during this event is even better than usual because the forecast of 82K is very low. […] So call options on the dollar on a good result, put options on the dollar on a bad result and on a mixed result we are going to wait for the choppy movements to settle down. We are going to see a possible sideway movement in the price of the asset and then we are going to look at which trend the market is going to prefer, an uptrend in the dollar or a downtrend in the dollar and from my perspective today as someone who has been following the markets and understands what market sentiment is today, it’s very important for investors today to see salaries going up, even maybe more important than the amount of jobs. So what we are looking at if we see kind of a mixed result, my bias is going to be towards the Average Hourly earnings, meaning that that’s going to be my tiebreaker. If we see positive Average Hourly Earnings, negative jobs number, mixed result, after the choppy movement at the beginning I am going to lean towards some kind of a bias, towards a call option on the dollar and not a put option. So now that we understand exactly how to kind of realise what the results mean, so the next stage is going to be how to actually take advantage of the results. When i mean the dollar, I don’t mean just the dollar right. I mean a few assets. So, here are a few assets that we are going to trade tomorrow.

Currencies:
GBPUSD
U.S. Dollar (DXY)
USDJPY
EURUSD

Indices
S&P 500
Dow Jones Industrial Average
NASDAQ

Not the best on this event and they are normally not open when the event is published)

Commodity:
GOLD

The Nonfarm Payrolls will be published this Friday and as always, it should have a major effect on the US dollar. The US economy is highly dependent on creating jobs. Donald Trump has said that creating jobs is his number one priority as president. The Head of the Federal Reserve Janet Yellen mentioned that the jobs market could influence t interest rates in the US. But this NFP could be unique because of the strong hurricanes that hit the US. The hurricanes have lowered job creation and lowered expectations for Friday’s NFP. The expected job growth for Friday is only 88,000.

In the long process of recovering from the financial crisis of 2008, every NFP counts. Traders should prepare their accounts for long-term and short-term trading on Friday. Main assets to trade will be the US dollar and Gold. The current trend is a stronger dollar and weaker Gold.This is ‘the’ opportunity to trade the dollar and Gold.

Tomorrow, analyse the results well and place some good, well calculated trades. I wish the best of luck to everybody here. I hope you enjoyed this session, I surely did. Thank you again for joining me here and I’ll see you next week same time. Same day.

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