It is the time of the month again and the financial world eagerly awaits Friday’s employment report out of the U.S. Last month was a disaster and heavy disappointment to market participants (U.S. (Un)Employment Report Rattles Currency Markets). It clearly showed that the U.S. is not expanding at the pace equity market performance would have you believe. A look at equity markets suggests that there are no problems to worry about in, not on a U.S. level and not on a global level. According to equity traders, the sky is the limit and the world has solved its financial problems.
As every Wednesday before the big Friday report, ADP issued its figure comprised of the private sector only. ADP has missed the actual figures on so many occasions and in general may not be the best overall indicator for Friday’s snapshot of the U.S. labor market for the month of April. Economists surveyed expected the ADP figure to show the U.S. economy added 150,000 jobs last month. The actual figure clocked in at 119,000. In case that is not enough to worry the bulls, March was revised down from 158,000 to 131,000.
Keep in mind that the ADP report is a survey of the private sector. On Friday we will get a more complete picture of private as well as government jobs and the government has continued to slash jobs. Economists expect Friday’s payroll data to show that the U.S. has added 148,000 jobs in April. We believe the report will offer another set of heavy disappointments and here is our prediction for Friday’s number:
We believe the U.S. added 89,000 jobs in April while the unemployment rate ticked up to 7.7% and downward revisions to the previous month.Other economic reports from GDP to manufacturing also point towards further slowdowns in the U.S. economy as well as China and Australia. Overall the global economic picture starts to point to potentially another global recession in most developed economies.
Here are a few guidelines in order to protect your currency portfolio from Friday’s Employment Disappointment
- Do not take any new positions before the data will be released
- Adjust your stop loss levels and set your stops tighter as a sub-100,000 figure will roil financial markets
- Adjust your take profit levels and increase them in order to potentially capture additional pips in your open trades
- Do not increase your trading volume based on hopes you will guess the economic data
- Do not panic and let your stop loss as well as take profit levels take care of the trade
- Close your trading platform 15 minutes before the data will be released and do not observe market movements until one hour after the releases which would be the open of U.S. equity markets
- You may opt to place pending order, buy as well as sell orders, 200 pips away from the price 30 minutes prior to the release