Sluggish Market Ahead of Payroll Report

January 5, 2006 by Trader Rich

The forex market was real slow today attributed to the fact that the first big economic release of the year is tomorrow. Consolidation looks likely to continue until then and maybe the rest of Friday. I would expect the market to react next Monday as it did earlier in the week as we are near many key levels. The dollar is reaching support at the 200 EMA (88.82) as well an uptrend line. It’s currently stalled at the .500 fibonacci level after pushing slightly through it yesterday.

Expectations for non-farm payrolls tomorrow is 200K and a 5% unemployment rate. I want to remind everyone that the direction of the market after the release of the payroll report tomorrow is the hardest to forecast. Here is a post I made a couple of months ago:

I was reading Currency Trader magazine and it is interesting to note that the payrolls report which is released this Friday is very difficult to forecast. According to the article, no matter what the forecast is, the forex market will spike on it, sometimes in both directions on the same day. This is why it is not recommended to open a position in the morning on the first Friday of each calendar month.

According to an analysis by S.A. Johnston, on the payroll date each month from January 1999 to September 2005, the Euro had 42 payroll date-days closing up and 36 days closing down. The maximum spike up was 240 points and the maximum spike down was 249 points.

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