Can You Make Money From Friday’s Jobs Report? Here’s My Strategy…

Despite some rather
aggressive buying this AM of the EUR/USD
by some NY and Paris based
banks, pushing the dollar below the bull trend-line at 87.90, as noted yesterday
— the next 18 hours or so should be somewhat quiet as dealers reduce risk and
square positions ahead of the payroll data at 5:30 AM PDT.

The consensus estimate is for a reading of roughly 180,000 new jobs in July,
versus 146,000 last month. Given that the dollar (DXC) has not benefited from
some strong data recently, i.e. ISM, I will want to see a much larger increase
than simply meeting the consensus in order to get bullish on the dollar from a
short-term trading standpoint. A number that exceed 200,000 and ideally, 250,000
would allow me to take a crack at shorting pairs like EUR, GBP, AUD or NZD — the
later two, while not as volatile do tend to trade a bit more orderly on big data
releases like payroll.

The table below is a solid gauge of reaction of EUR/USD, historically, but
serves me well when deciding on how to manage a position I take on the heels of
a payroll number.

This, combined with knowing some key technical levels ahead of time, can allow
one to maximize exit points for maximum profit.

Based on the current trading range of EUR/USD, and assuming that no major price
changes occur after this article is posted, we would focus on the levels (noted
by pink lines) as the levels from which to use as stop loss/profit targets for
tomorrow if you are inclined to scalp the data release.

Closed Trade

We went short NZD/USD last night based on the chart reference we made in
yesterday’s column, but only took in a modest profit on 14 pips as the dollar
once again came under pressure earlier this AM.

As always, feel free to send me your comments and questions.


Dave Floyd is President of Aspen Trading Group, which provides research/trade
ideas on the FX and equity markets as well as analytical software. Aspen Trading
Group is based in Bend, OR.