Case-study: ADP Employment Change

The chart below shows usdjpy reaction to the ADP employment report on Feb. 4. The report showed huge job losses but a little better than average estimates.

Coming back with profit!

It was about two weeks that I had no trade. I sold USDJPY at 107.13 after U.S. market close. It was when:

• U.S. Indexes dropped more than 2.5 percent on fear of negative impact from job losses
  Jobless claims rose to 444k, about 15k more than estimates
• ADP Employment Change showed 33K decline which made the market more worry about the Friday's Employment Report
• Improvement in ISM Service index and Non-farm Productivity both overshadowed by negative reading in jobs market

I bet on continuing negative sentiment ahead of tomorrow's Employment Report, but the position resulted in 47 profit very soon when it automatically closed at 106.65 as early as the New Zealand market's open.

US Employment Report; Could ADP be a trigger?

I still think that the Friday's Employment Report is the most important data for the week. The ADP Employment Change is ahead which is considered as an early estimate for the official report.

It would be easier to sell dollar if today's better-than-expected Consumer Confidence didn't affect the market so positively. Crude oil dropped almost 3 $/b when euro depreciate one percent against the greenback.

Should oil drop below 120 it would be very supportive to the dollar. It may happen if the Petroleum Status report shows another increase tomorrow. However I see that price unlikely.

So I just wait until technical data suggest that the balance is going to change against the dollar and then there would be options for taking position.