REMEMBER the first time you heard the excitement around non-farm payrolls; the fuss that pushes back Friday afternoon drinks? Most do, and it’s not until you realise they’re a big deal and can set the market alight that you too start to get excited by them. Trading the dollar and American stock indices always seem more fun straight after their announcement.
Well, actually this is not always strictly true. We have all been coloured slightly by the last few eventful years. Last week’s number – as Michael Hewson of CMC Markets puts it – did “absolutely nothing.” The payrolls came and went and the market quickly returned to where it was before the report’s release. The number came in pretty much right on most analysts’ target, dampening any chance of market fireworks.
Disappointing for traders until you realise there is a way to make money from placid markets too (not to mention get to the pub earlier). This spread betting miracle has been delivered by IG Index who have just launched binary bets on the payroll figures. Its books opened for the first time last week. And those who placed a bet on consensus expectations could smugly leave work on Friday knowing that they had come out on top.
This sort of predictable market behaviour looks set to continue. Hewson says: “Now we’re back at the 195,000-200,000 level for payrolls, there’s a lot more optimism for March and April’s figures to come in on target.”
But how can traders check up on their hunches? Analyst reports, of course, can be mined for predictions, and market commentary can give you a steer. But don’t forget: the big ADP payroll number is released on the Wednesday before the non-farm figures. While they have not been as useful of late, the ADP figures still provide an extra piece to the puzzle. Traders concerned that volatility could be ebbing away should consider cashing in on stability.