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How to Trade the Nonfarm Payroll Report

Monday, 31 Oct 2011 | 12:01 PM ET
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This week will be a big one for U.S. economic data and Fed pronouncements. Here's how to set up for Friday's nonfarm payroll report.

Brace yourself: This week will bring a series of central bank meetings and some important economic data.Amelia Bourdeau, director of foreign exchange at Westpac Institutional Bank, has her sights on nonfarm payrolls.

"The game plan is to have two trades ready," she told CNBC's Scott Wapner. If payrolls come in over 95,000 — right around what many economists expect — Bourdeau wants to buy the dollar against the yen. If payrolls are below 60,000 she would buy the dollar against the Canadian dollar, since "a weak jobs report in the U.S. would harm Canada's economy as well."

Bourdeau thinks the bullish outcome is more likely. And now that the Bank of Japan has intervened to weaken the yen, Bourdeau recommends entering the trade at 77.00 with a stop at 76.00, and she would look for a move back to the overnight highs around 79.50.

On Friday Bourdeau thought Japan might wait to see if a strong U.S. payroll figure would take the yen down a notch without the central bank having to intervene, but "I guess they just couldn't wait any longer," she told me.

Money Match Up
How you can make money from the euro's next move, with CNBC's Scott Wapner and the Money in Motion traders. Also, using currencies to make money from next week's jobs report. And will a strong report help the dollar against the yen.

You can watch the discussion on this videotape.

CURRENCY FUTURES

Tune In: CNBC's "Money in Motion Currency Trading" airs on Fridays at 5:30pm and repeats on Saturdays at 7pm.

Learn more: The essential vocabulary for currency trading is on Key Currency Terms. Top currency strategies are broken down for you in Currency Class.

Talk back: Tell us what you want to hear about - email us at moneyinmotion@cnbc.com.

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