Expecting NPP Data and How to Make Money in USDCAD Pair?
The Bank of England yesterday left the parameters of monetary policy unchanged. This was expected, since it would be risky to tighten monetary policy when inflation is not yet going through the roof (as, for example, in the United States), but economic recovery due to the delta is in question. Well, there is nowhere to mitigate it, plus you simply need space for possible maneuvers in the future (after all, it can always be worse than now). The pound practically did not react to this decision.
However, today the situation in the GBPUSD pair, as well as in other dollar pairs on the foreign exchange market, may change dramatically. The data block for the US labor market is of increased importance in the current environment.
Recall that the Fed is afraid to tighten monetary policy, fearing to harm the economic recovery. Therefore, strong NFP numbers will be a double positive for the dollar. On the one hand, there is a positive signal from the economy, and on the other hand, it is a reason to think that the Fed may begin to tighten monetary policy earlier than the markets expect.
It is another matter that almost 900K NFP expected by the markets in the light of 300K + from ADP seems unlikely. And here the dollar can run into a double negative (see logic above).
However, the correlation between NPP and ADP is traditionally rather weak (about 25%), so the level of uncertainty is quite high.
For those who want to risk at a minimum and not bet on one or another outcome according to the data, we recommend that you pay attention that simultaneously with the data from the USA, a block of statistics on the Canadian labor market will be published. That is, the USDCAD pair is likely to face an explosion of volatility. In order to make money on it, it is worth placing two pending orders (buy stop, sell stop) in the USDCAD pair a minute before the data is released at a distance of 20 points from the price at that time. And then just wait until one of them works.
However, today the situation in the GBPUSD pair, as well as in other dollar pairs on the foreign exchange market, may change dramatically. The data block for the US labor market is of increased importance in the current environment.
Recall that the Fed is afraid to tighten monetary policy, fearing to harm the economic recovery. Therefore, strong NFP numbers will be a double positive for the dollar. On the one hand, there is a positive signal from the economy, and on the other hand, it is a reason to think that the Fed may begin to tighten monetary policy earlier than the markets expect.
It is another matter that almost 900K NFP expected by the markets in the light of 300K + from ADP seems unlikely. And here the dollar can run into a double negative (see logic above).
However, the correlation between NPP and ADP is traditionally rather weak (about 25%), so the level of uncertainty is quite high.
For those who want to risk at a minimum and not bet on one or another outcome according to the data, we recommend that you pay attention that simultaneously with the data from the USA, a block of statistics on the Canadian labor market will be published. That is, the USDCAD pair is likely to face an explosion of volatility. In order to make money on it, it is worth placing two pending orders (buy stop, sell stop) in the USDCAD pair a minute before the data is released at a distance of 20 points from the price at that time. And then just wait until one of them works.
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