Because of the unpredictable nature of the NFP release, we suggest utilizing a pull-back approach rather than a breakout strategy. In order to initiate a trade utilizing a pullback strategy, traders must wait for the currency pair to retrace its previous movement. Job creation is seen as a key indication by the Bank. The likelihood of policymakers pursuing an expansionary increases when unemployment rates are high (stimulatory, with low interest rates). In order to boost economic production and employment, an expansionary is pursued. The consequence is that when the unemployment rate exceeds the norm, the economy is seen to be underperforming, and authorities will attempt to boost it. As a consequence of the Fed’s stimulatory , interest rates have fallen and demand for the dollar has fallen (money flows out of a low yielding currency).
|| A spike in and a widening of spreads coincide with the publication of the NFP data.
|| The and spreads of currency pairings that are not linked to the US dollar may also rise, as a result of the strengthening of the dollar.
|| A trader’s risk is heightened and the possibility of spread widening after the publication of the NFP data.
|| We suggest that you use the proper leverage, or none at all, to counteract this and prevent getting stopped out.
However, other key data releases such as consumer price index ( ), Federal funds rates, and GDP growth are also essential to market participants. We also suggest that you study more about central banks’ responsibilities in the currency market, as well as what interventions entail in order to make better informed decisions.