The instructions say to cast on 5 stitches knit first row and then push sts to opposite end of need, pull yarn around, purl next row and do not turn. How do you carry the yarn across to continue knitting from the other end.
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The full pattern can be found at http://www.modadea.com/patterns/LM0200.htm It is the start of the strap for the purse.
That is an i-cord you will be knitting. After you slide the stitches to the other end just start knitting again with the yarn across the “back” or on the other side from what you are seeing. After a few rows you will see that it forms a cord. 
Toward the of bottom of this page you can see how Amy does it.
They want you to pull the yarn across the back of the work–that’s what will make it rounded.