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What Impact Does a Higher Non-farm Payroll Have on the Forex Market?

By

澳洲幸运5开奖号码历史查询:Kesavan Balasubramaniam

Updated January 06, 2024

Reviewed by

Thomas J. Catalano

Fact checked by

Pete Rathburn

The monthly 澳洲幸运5开奖号码历史查询:non-farm payroll report from the U.S♚. Department of Labor can have a substantial impact on forex markets when the numbers are released on the first Friday m♌orning of a new month.

Traders are always monitoring indicators to identify trends in economic growth and some of the most-watched economic indicators include inflation, housing starts, 澳洲幸运5开奖号码历史查询:gross domestic product, and the monthly payroll re🎃port. This contains a variety of data and statistics regarding the employment situation in the United States.

Key Takeaways

The monthly jobs report from the U.S. Department of Labor can have a notable impact on the forex market because traders are always monitoring economic data for signs of strength or weakness.
The numbers are released on the first Friday of the new month and capture employment trends from the month before.
The headline payroll number is considered to be the most important but traders also look at other data in the report such as the unemployment rate, changes in wages, and any revisions to past reports.
The forex market will likely see a notable reaction when the payroll report deviates substantially from economists' expectations.

Understanding Non-Farm Payrolls

The U.S. Department of Labor's Bureau of Labor Statistics releases the monthly jobs report on the first Friday of a new month with some exceptions due to holidays. The report covers the relevant employment statistics from the previous month. Numbers that are released on the first Friday in February include data for January. The report contains key information on unemployment, 澳洲幸运5开奖号码历史查询:job growth, and payrolls.

Non-Farm Payroll Data

The non-farm payroll data included in the jobs report typically has the most market impact. The number is often included in news headlines and represents the total monthly increase or decrease in paid U.S. workers of any business excluding general government employees, private household employees, sole proprietors, employees of 澳洲幸运5开奖号码历史查询:nonprofit organizations that assist individuals, unpaid volunteers, and farm employees.

Non-farm payroll data is analyzed closely because of its importance in identifying trends related to the rate of 澳洲幸运5开奖号码历史查询:economic growth and 澳洲幸运5开奖号码历史查询:inflation. The increase is an indication that the economy is growing when non-farm payrolls are expanding but this may lead to an increase in inflation. That may be viewed as a negative for the economy if increases in non-farm 🐟payroll occur at a fast rate.

Important

Data on wage growth and the rate of unemployment are also included i𒉰n the monthly jobs report and help shape inflation expectations and estimates for fut꧂ure economic growth.

Expectations vs. Reality

As with many other economic indicators, the difference between the actual non-farm data and the figures expected by economists will often determine the overall market impact. The forex market will likely react to the new reality by adjusting prices and exchange rates if there are an🍰y major surprises or disappointments that devi𝓰ate from expectations.

Forex traders might be motivated to sell U.S. dollars in anticipation of a 澳洲幸运5开奖号码历史查询:weakening currency amid𝄹 concerns that economic growth is not as robust as previously thought if non-farm payroll growth is low💟er than economists' estimates.

The opposite is true when the data is stronger than economists' expectations. A strong report can sometimes motivate traders to buy U.S. dollars on expectations that economic growth in the United States is improving.

Why Are Farm Employees Excluded From the Jobs Report?

Farming is a seasonal occupation. Jobs and pay in this sector can vary significantly by location and time of year. Data collected in one week or one area of the country will most likely differ from overall national or yearly data. The U.S. Department of Agriculture takes on the task of monitoring and collecting data on farm labor.

What Is Gross Domestic Product?

Gross domestic product (GDP) is a measurement of the value of goods and services produced by the U.S. economy during a specified period. It doesn't include the values of any goods and services that are depleted by the process of production. GDP is one of the most critical components of the overall financial market.

How Does the Forex Market Work?

Forex stands for "foreign currency exchange." The forex market involves buying and selling worldwide currencies based on whether an investor believes that the value of one currency will rise or fall in comparison to another.

The Bottom Line

The monthly jobs report from the U.S. Department of Labor guides traders who are on the lookout for signs of strengths or weakness involving the U.S. dollar. It includes information on the unemployment rate and any trends in wages. The forex market then reacts by adjusting prices and 澳洲幸运5开奖号码历史查询:exchange rates if there are any maj🌌or variations. Interpreting them is a learned art best performed by professionals.

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U.S. Bureau of Labor Statistics. "."
Federal Reserve Bank of St. Louis. "."
U.S. Department of Commerce. "."
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