A Dangerous Trade
Over the past two months, in particular, shockingly weak nonfarm payrolls numbers have resurrected concerns about the country's pace of recovery -- and that's caused unusually large volatility in currencies. Of all the economic data released in the U.S. and Europe, the jobs number is notorious for causing the largest movement in currencies, and we expect Friday's report to live up to this reputation. Everyone will be watching closely to see whether recent weak growth will turn into a three-month trend and, if the data fail to rebound on Friday, the Federal Reserve and the U.S. dollar will be in big trouble.
How to trade the employment report is one of the most common questions asked by new and experienced foreign-exchange traders, because all are trying to get a grasp of the volatility it induces. In my opinion, the best way to trade these data is to avoid it, because the spikes almost always occur in currencies after the numbers emerge. For traders who look at the volatility and only see opportunity, this is probably not a satisfactory answer....365 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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