Day Traders brace for NonFarm Payrolls as more slowdown is expected at 830

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The James’ Report: Professional Resources for Professional Traders

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Traders across the globe waiting for NonFarm Payroll Data from the US this morning

Recent jobs data has been mixed, however slowdown in the global economy is very clear and today’s numbers are expected to reflect that.

Large equity and commodity moves on Thursday have likely ‘priced-in’ these assumptions of poor economic data today in the US

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Today’s Economic News:

Day traders have an easy morning ahead, wrapping up a busy week of trading with 830am NonFarm Payrolls. This is the biggest news event we see all quarter, so everyone’s focus will be on the US at 830am today.

Nonfarm payroll employment in June slowed to a crawl with an 18,000 gain, following a 25,000 rise in May, and 217,000 in April. Once again, the government sector held down payroll numbers as private nonfarm payrolls outpaced the total with an increase of 57,000 in June, following a 73,000 advance in May. Goods-producing jobs edged up 4,000, following a 3,000 rise in May. Manufacturing jobs rebounded 6,000 after a 2,000 dip in May. Growth in private service-providing jobs slowed to a rise of 53,000 after a 70,000 increase the prior month. The government sector shed another 39,000, following a 48,000 drop in May. Average hourly earnings also slowed June, coming in at no change, following a 0.3 percent rise the prior month. From the household survey, the unemployment rate edged up to 9.2 percent from 9.1 percent in May.

During the mature phase of an economic expansion, monthly payrolls gains of 150,000 or so are considered relatively healthy. In the early stages of recovery though, gains are expected to surpass 250,000 per month.

The civilian unemployment rate is a lagging indicator of economic activity. During a recession, many people leave the labor force entirely, so the jobless rate may not increase as much as expected. This means that the jobless rate may continue to increase in the early stages of recovery because more people are returning to the labor force as they believe they will be able to find work. The civilian unemployment rate tends towards greater stability than payroll employment on a monthly basis. It reveals the degree to which labor resources are utilized in the economy.

In my opinion, NonFarm Payrolls are often over-anticipated by day traders. Much like GDP, we have everyone excited to a big move, but typically the market has already priced in such an important news event so the actual move that occurs when the news comes out is ‘muffled’ or contained/sloppy. I will expect to see much of that this morning at 830am.

The key to trading NFP on Friday, a summer Friday i might add, is to get in early, be very patient to wait for the market to calm down (or speed up) after the news comes out, and then once we see some direction/personality in the markets we can begin to look for trades.

We need to keep an eye on the clock today. Once we get through 930am US Markets Open and then we have about an hour before the lunch session will settle in on a summer Friday. I assume volume will drop around 1030am and then we wont have much to work with after 11am today.

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Looking at the Charts:

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The US Dollar Index is trading slightly lower this morning, and you can see we’ve failed at the highs, traded sideways for a moment, and now making lower lows. Im using this faster 13range chart to show me the short term trend. With today’s news @ 830am im looking at overhead resistance and support below as easy places for the dollar to bounce, so use the dollar correlation along with these levels to make educated decisions today.