3 Potential NFP Scenarios for AUD/USD

I’m sitting by the sidelines this week, my friends!

With plenty of top-tier reports, especially the motherlode of U.S. data (the NFP report) just around the corner, I’m opting to sit by the sidelines and just observe price action.

I’m also taking it easy at the start of September since I’ve had a pretty shaky trading month in August. If you remember, my USD/CAD day trade and NZD/USD head and shoulder trades offset the gains in my AUD/USD day trade last month. With U.S. traders returning from their summer vacations this week, I’m preparing for a potential shift in trading environment.

For this week, instead of being gutsy (or careless?) enough to enter a trade at market, I’ll talk about the potential scenarios for AUD/USD this NFP Friday. Word from my friends is that analysts only expect the non-farm payrolls report to come in at 120,000 in August after printing at 163,000 in July.

AUD/USD Scenarios

If the NFP report prints below 100,000 then traders might interpret it as a sign that the Fed will be launching its QE3 program in its meeting next month. The Aussie could rally against the dollar and AUD/USD could shoot up from its current support at the bottom weekly ATR level, which is near the 1.0250 minor psychological handle.

On the other hand, a significantly stronger-than-expected NFP reading could be taken as a sign that the Fed would hold off stimulus for the month. This could boost the dollar against its counterparts and drag AUD/USD below the bottom WATR support. My friends on my AUD/USD thread seem to think this is the most likely scenario.

The last but definitely not the least scenario for AUD/USD is a direct correlation to the NFP report. That is, a slightly positive NFP reading could boost the Aussie, while a slightly disappointing number could weigh on the comdolls. After all, the employment numbers of the world’s largest economy is not something that investors ignore.

In any case, I’ll be watching AUD/USD closely. More specifically, I’ll be watching to see if the levels that we had marked in our Comdoll Trading Kit this week turn out to be valid inflection points during the report.

What about you? Do you have any positions open this week? Are you sitting by the sidelines too or are you trading the NFP?

Don’t be shy to share your two cents!

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Have fun and good luck trading this week, friends!

Happy time

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  • Foricks

    Do you see hidden divergence in the AUD/USD chart? I see this as an opportunity to add onto my carry trade at just under 1.01 (38% fib). Might need some good NFP numbers to spark that one.
    Cheers,
    Foricks

    • happypip

      Nice trade! Let’s see if the NFP will give it a good boost. Best of luck to ya and nice seein’ you here again :)

  • Jason Macko

    Currently I am holding both AUD/USD and AUD/JPY, all I can say is that I hope they both go up, but my AUD/JPY (in profit by 100+ pips) has a stop but my AUD/USD is a carry and I will wait weeks for it to hit my target of 1.06/1.07 and I have the margin to protect it before it does.

    • happypip

      Sounds like a plan! Excellent carry trade on AUD/USD, mate. Now that summer’s officially over, I think longer-term trends are back which means there’s a really good chance that it’ll reach your targets. Where were you able to enter AUD/USD?

      • Jason Macko

        that’s sort of the bad part of my plan, I bought at 1.410 and held even after 120 pips profit and left it a couple of days and all of a sudden, down into the 1.100 area, but I continued to hold and now, well, at least it’s a reasonable trade again. The only smart thing I did was buy lots of AUD/JPY when it hit it’s low (missed the low by 25pips) and waited until NFP and sold it for a very, very nice profit. Now…just a matter of waiting for my AUD/USD to climb higher, and I make interest in the meantime. Cheers.

  • Nicogaglia

    Ciao!
    The pair is trying to exit from a descending channel in h1 timeframe, let’s say 1.035 will trigger a big rise.
    If you note, a bullish flag is formed.

  • ant2a

    I think that you are right…. Sitting by the sidelines is also a position.. no profit for this position, but also without casualties…!!! ;-)

    • happypip

      Yep! No position is a position! Are you planning to trade the NFP report? :)

      • ant2a

        Nooo… I am not good at this… ;-)