Forex News Trading Strategy, US ADP NFP Employment: April 4, 2012

Automatic Data Processing (NASDAQ:ADP) is releasing it's own estimate for the private sectors of NFP (Nonfarm Payroll). This is a high impact release and it's followed by currency traders as they look for hints on Friday´s NFP official release. Here's the forecast:


8:15am NY Time US ADP NFP Change Forecast 205K Previous 216K

ACTION: 260K BUY USD/JPY/ 150K SELL USD/JPY

The Trade Plan

I usually don't trade this release but I use it for future trend references. However, if the deviation of 50K is actually hit, the market probably won't have a problem pushing it, and this will undoubtedly change market perception for the NFP release; therefore, its best to be around your computer during the release time rather than find out what happened hours later and potentially miss the entire movement.

With the above being said, we'll be looking for a deviation of 50K, so if we get 260K or better release, I;d be looking to BUY USD/JPY. If we get a 150K or worse, then I'd be looking to SELL AUD/USD or AUD/JPY on risk aversion trades. I will also recommend finding the best currency against the USD pending the actual data.

In the event that we do get our deviation, we'll be trading this news based on after-news Retracement Trading Method

The Market

Once again, the  market is expecting a strong private payroll growth as reflected in the forecast today. With this being the first real data that helps to predict Friday’s NFP, the market will probably react sharply to this release if we get a huge surprise, especially if we get a strong figure. The private payroll number for Friday’s NFP is expected to be around 233K, which corresponds to the ADP release today, and any surprise (better or worse) should move the market.

Additional Thoughts

The ADP NFP Employment Release is always considered as a high impact release because ADP is the largest private payroll processing provider in the U.S. Traders in general pay more attention to this release, especially during NFP week. ADP usually releases its version of Nonfarm Payroll numbers before the actual NFP based on it´s proprietary private payroll data.

This release could start a pre-news trend for Friday´s NFP. Pay attention also to both ISM PMI’s alone with Monster’s Index & Challenger’s Job Cuts report for a complete picture.