mikestockmarket

1 year of Non Farm Payrolls and Unemployment Data

INDEX:DXY   U.S. Dollar Index
923 26 8
A trader I know recently said to me that not only can you trade the immediate volatility in the market after Non Farm Payrolls and Unemployment Rates but also it often sets the mood for the market in the following month all the way up to the next data release, now this sounds like it has some logic to me so I have plotted all the NFP and UR             points for the last year on the Dollar Index             . There is potentially signs of turning points in the markets on these key dates.

What do you think?

KEY:
NFP = Non Farm Payroll
NFP measures change in the number of employed people during the previous month, excluding the farming industry.
Usual Effect: Actual > Forecast = Good for currency

UR             = US Unemployment Rate
UR             measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month.
Usual Effect: Actual < Forecast = Good for currency
Nice chart , very informative. Thanks for sharing
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Thank you for sharing!
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thx for this info, very much appreciated !

just some thoughts: even I suppose you all know it anyway :

a) given this 12x data and price action you see both NFP as well as UR was ~50% correct. e.g. NFP was worse than expected, but UR was better than expected, price rallied, and sometimes the other way around. Only once (!) both figures came worse than expected and the price tanked. Hence the reaction is random.

b) the strange thing about the UR is the private houshold survey, which is based on only 60000 (!) randomly selected households and can vary to the extreme , as we just saw last time, when UR dropped to totally unexpected 7.8%.

c) obviously the US$ Index is also driven by so many other factors (e.g. Euro crisis itself).

So, as always, this is one of many indicators to watch out.
What I do is of course he same, I look for the numbers vs expectation, BUT what is also VERY interesting is the reaction afterwards. Let's say numbers coming better than expected, but market does not reflect this and goes south, than I go with the price action.

best of luck and thx again mike. KP
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Thanks for the feedback.

That's very interesting info about UR taken from only 60000 sample size I didn't know that.

I showed this to the trader who originally said about market reaction etc. He suggested I plot against the S&P 500 so tonight I will run it over that and share later.
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oh no. pls don't misunderstood. the private household survey is only a PART of the overall survey. but it's amazing how random that part of the survey can change the number itself as we witnessed last time. and this 60000 survey (as part of the total number crunching) will obviously not be "revised" because the next time totally different 60000 households will be asked... BUT as they explained in Bloomberg it was THAT 60000 private household survey this time which brought the rate down to 7.8% (http://www.guardian.co.uk/commentisfree/2012/oct/05/jobs-numbers-can-they-be-cooked)
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Did it again on the S&P500, much more interesting...

V2 - 1 year of Non Farm Payrolls and Unemployment Data (S&P500)
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Hi Mike, very interesting idea but can't agree with it for various reasons.
Chartbuzz have mentioned a few. There is way to many factors pushing US Index.

In May this year EU entered a very serious crisis.
At the end of July Draghi said "ECB will do whatever it takes to save the EUR" (That was PA level @ 1.2000 but we ended up EUR was pulled up with fundamentals).

Anyway, very interesting idea, but just can't find anything sold that I would use as decision making in my trades.

Cheers!
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I have ran this idea again, this time on the S&P500
V2 - 1 year of Non Farm Payrolls and Unemployment Data (S&P500)
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mikestockmarket mikestockmarket
Chart:
snapshot
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charttrader PRO mikestockmarket
Thank you for the update.
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