Look To Jobs Numbers To Confirm Recent Trends

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April 1, 2014 By: , No Comments


Forex markets were treading water for a good part of this latest week.  But these trends could see some near term changes that could develop into longer trends when analysts assess the economic data that is scheduled for release next week.  Some currencies are vulnerable to major corrections more than others, and the best options for bearish traders (short sellers) look likely to be found in the Euro and the British Pound.

Forex traders are likely to experience a slowdown in market volatility in the early parts of next week.  Most of the directional attention will be focused on Friday’s Non Farm Payrolls numbers, and this will create a scenario where most of the real trading orders will be directed toward the Friday session.  This does not mean that short term range trading opportunities cannot be found.    But it does mean that stop losses should be kept tight when forex traders are looking to enter into new positions.  The potential for breakouts this week is large.  But what is more important is the fact that the data releases seen here could become central drivers for the longer term trends that are seen for the rest of this year.

The Week Ahead in Forex Markets:  Wait for the Pop

In the week ahead, forex traders will need to prepare for a small surge in volatility during the Wednesday session.  This will then be followed by a lull in trading until there is a real pop during the Friday session.  The ADP employment report will be released midweek.  This measures the number of private sector jobs that have been added during the previous month.  The ADP release is typically used as a precursor for the much larger Non Farm Payrolls number that is released the same Friday.

So what does this mean for forex traders going forward?  It means you need to watch for validation in terms of your underlying bias.  Are you bullish or bearish.  This next week’s data should prove whether or not you are correct.  The monthly Non Farm Payrolls number is expected to come in at 190K, which is a slight improvement from the 175K that was seen during the previous month.  How will the affect the Dollar?  The trends are not so clear.

If markets view a positive result as risk positive, expect to see some gains in the Euro and British Pound.  Macro trends suggest that this is unlikely to be the case, so prepare for a much larger move to the downside in currency pairs like the EUR/USD and GBP/USD.  In any case, prepare for the tidal wave as we will be getting new and critical information this week.

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