Forex Signal (Wed May 4 2011, 8:15am NY Time EST) – US ADP Non-Farm Employment Change

ADP or Automatic Data Processing (NASDAQ:ADP) is releasing it’s own estimate for the private sectors of NFP (Nonfarm Payroll). This is a high impact release and it’s followed by currency traders as they look for hints on Friday’s NFP official release. Here’s the forecast:

8:15am NY Time US ADP NFP Change Forecast 200K Previous 201K
ACTION: 250K BUY USDJPY / 150K BUY EURUSD

The Trade Plan
I usually don’t trade this release but I use its figure for future trend references, however if the deviation of 50K is actually hit, market will probably have not problem pushing it, and this will undoubtedly change market perception for the NFP release; therefore it is best to be around your computer during the release time rather than finding out what happened hours later and perhaps missed the entire movement.

With the above being said, we’ll be looking for a deviation of 50K, so if we get 250K or better release, I’d be looking to BUY USD/JPY; if we get a 150K or worse, then I’d be looking to BUY EURUSD… I will also recommend to look at my strength meter and find the best currency against the USD pending the actual data.

In the event that we do get our deviation, we’ll be trading this news based on after-news Retracement Trading Method. For more information on my trading methods, please read:
Henry Liu’s Trading Method

The Market
Current market expectations suggests a higher reading in employment. This comes from the reports that manufacturing companies are looking to hire for the rising demand of U.S. exports.

As we know that most traders look at both ISM Manufacturing and Non-Manufacturing PMI’s, and the ADP release for hints on NFP release. So use this week’s releases to determine with anticipation your trade moves.

Additional Thoughts
The ADP NFP Employment Release is aways considered as a high impact release because ADP is the largest private payroll processing provider in the U.S., traders in general pay more attention to this release, especially during NFP week. ADP usually releases its version of Non-Farm Payroll numbers before the actual NFP based on it’s proprietary private payroll data.

Pre-news Consideration
There should not be much pre-news trading opportunities for this release. But this release could start a pre-news trend for Friday’s NFP.

Historical Chart and Data for US ADP Non-Farm Employment Change

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