Or so it seems to many. While I’ve gone fractionally overboard in the title I do think this is one of the most significant employment reports we’ve had for years. It’s certainly possibly going to be one of the biggest market movers we’ve had for a long time. I don’t need to “big” up the focus on this report as the market has done that already.
The data is and isn’t about tapering. Tapering is coming, that’s old news. The new news (as also pointed out by our astute readers) is how much will be cut back.
As reader Xin said
“TBH my biggest fear is that we end up with our eyeballs glued to the screen once a month for the next 10 years while we listen to see if this month will be a taper of expansion of QE, it’s sincerely frustrating to have an additional hand in the pot that can completely spoil any guidance received throughout the month from reported data.”
I expect there to be a big move today one way or the other. The biggest move for the dollar will up. The stage will be set for a proper trend to develop in what are largely directionless markets. If the number is bad (but not horrendous), then we will fall but it will probably mark a good point to start building longs. If it is horrendous and the unemployment rate rises, then tapering will be called into question and we could fall massively.
Remember that there are three elements to the report. The headline number, the unemployment rate and the participation rate. I feel the market will look to the unemployment rate as the most important as it’s the one with the big fat Fed bullseye taped to it. Be aware as we could get a bad payrolls number but a fall in unemployment. We could also get a reverse with a good number and a rise in the unemployment rate as the participation rate could rise.
Wherever the price goes look to technical and order levels out around 100-150 pips away from the market at release. The initial reaction will stop somewhere and it’s usually a technical level at the extreme of the move. Watch the price action to see whether those levels will hold or whether new pressure comes in. Make sure you have all your parameters in place before making a trade, i.e profit and stop levels and don’t be afraid to bail of you don’t feel comfortable.
It’s a lottery for sure and you’ll have to be quick to gauge the full impact to catch the move. Back in my old LIFFE days it was the human brain that got there first not the algos. It was the most exciting figure of the month and the pits would be packed like the tube at rush hour. The air was full of electricity in the seconds leading up to the release and you could hear hundreds of people sucking in and holding their breath. You’d get maybe 1-2 seconds of silence after the numbers popped up, then the first trade would go and it would become pandemonium for up to an hour. It paid to remember what brokers had what orders at all the different levels so you could hit them as quick as. When it got too manic the pit officials would signal “Fast market” and it would become a free for all on prices. You could be buying 6’s from someone next to you while hearing it was 9 bid across the pit. Great days indeed.
I still get just as excited before the figure but it’s obviously not the same sitting in my little office at home. I still chuck on the old jacket for good measure though.
Whatever happens, take care. If you’re not sure stay out until the picture is clear. As usual we’ll do our best to give the outcome and analysis as fast as possible.
Good luck.
