Trading the payroll number

Posted by Scriptaty | 9:06 PM

On Monday, Oct. 4, before the September employment number came out, the European market began to price in a better-than-expected jobs report by buying up the dollar, as shown in the USD/CHF rate. After a sharp rally from 1.2530 to 1.2670, the market settled into a narrow sideways range between approximately 1.2610 to 1.2670 through Thursday. In the final eight hours before the employment number release, the market made several feints, first down out of the range (chasing out weak longs who had bought anticipating a strong non-farm payroll number) and then up (squeezing out weak shorts who had sold the break of the range). At the moment of the NFP release (8:30 a.m. Friday, Oct. 8), the market had returned to the midpoint of the range around 1.2630/40.