Nonfarm news is one of the most important events in the economic calendar, especially for those active in the financial markets. Published monthly in the United States, this report not only measures the health of the labor market but also has a profound impact on foreign exchange, stock, and commodity markets globally. Let’s explore with Learn Forex Trading the importance and impact of nonfarm reporting in the article below.
Learn About Nonfarm news
What do you understand about nonfarm reporting? Let’s find out together.
What is the Definition of Nonfarm news?
Nonfarm news (Nonfarm Payrolls, NFP) is a set of indices regularly published monthly in the United States. It is of great interest in the fields of economics and investment. Simply, it measures the number of jobs created in the U.S. economy excluding agriculture.
Time of Announcement
The Nonfarm Report is released monthly by the US Bureau of Labor Statistics (BLS). Typically, this report is published at 8:30 a.m. Eastern Time on the first Friday of each month.
Main Objective of the NFP Report
Nonfarm Payrolls’ primary goal is to provide a comprehensive view of the health of the U.S. labor market. By tracking fluctuations in job creation, readers can evaluate the economic situation and forecast growth and recession trends. From there, make reasonable investment and business decisions (True).
See more: What is inflation that has a strong impact on Forex?
How to Start Nonfarm News
What are the steps to produce a nonfarm report? Below, Self-study Forex will give specific information.
Nonfarm news Payrolls (NFP) Update Process
Announcement Date and Time
The Nonfarm Report is published monthly on the first Friday of each month by the US Bureau of Labor Statistics (BLS). Typically, this data is released at 8:30 a.m. Eastern Time.
Data Preparation and Collection Procedures
Preparation phase:
- Before publication, BLS statisticians and staff collected data from thousands of businesses and organizations across the United States.
- Businesses are required to report the number of employees, hours worked, salaries, and other factors.
Data processing:
- Collected NFP report data is entered into the computer system and processed to create a detailed set of data on employment status.
- Information on occupational groups, industries, and other factors is categorized to create detailed statistics.
Collect data for nonfarm reporting
Confirmation and Approval Process
Accuracy Test:
- Before publication, data is thoroughly checked to ensure accuracy and avoid errors.
- If any problems are discovered, BLS will make adjustments and reconfirm the data.
Approval and Publication:
- After checking and confirming, Nonfarm payrolls news data is approved for publication.
- BLS publishes information on its website and through other media channels.
Factors Influencing NFP Reporting Volatility
Let’s take a look at some factors below!
Other Economic Data
GDP growth:
The level of GDP growth often affects Nonfarm payroll data. Economic growth is often accompanied by the creation of new jobs.
Unemployed rate:
Historical unemployment rates can be a good predictor of non-farm reported data. Reductions in unemployment are often accompanied by job growth.
Financial Market Factors
Forex market:
Forex traders will react strongly to any sudden changes in Nonfarm news data. Especially if it doesn’t reach expectations.
Stock market:
The stock market will often fluctuate according to the results of Nonfarm Payrolls. Employment growth often stimulates investor confidence.
Monetary Policy
Interest rate:
Strong NFP results could create upward pressure on interest rates from the Central Bank, affecting currency markets.
Labor and Tax Policy:
The results of the NFP report can impact the government’s tax and labor policy decisions.
Global Situation
Influence from Global Events:
Global events, such as financial crises or pandemics, can impact NFP results and create volatility.
International commerce:
Uncertainty in international trade can also have a significant impact on Nonfarm news data.
In its entirety, Nonfarm payroll data is not just a monthly statistical table but also an important and sensitive index, capable of influencing the global economy and markets.
How Does the NFP Report Impact the Markets?
Which markets does Nonfarm news deeply affect? Let’s see how the markets are affected through the content below.
Nonfarm Report Affects Forex Market
The value of the dollar has been greatly affected, below is evidence for each item.
Increase or Decrease in USD Value:
Powerful Data:
When Nonfarm news employment numbers surge, the USD often becomes strong due to a thriving market economy. Enterprises that import and export at the USD exchange rate benefit, and margin profit increases…
Weak Data:
Conversely, when NFP numbers are poor, the USD may weaken due to concerns about a delay or economic slowdown.
Impact on Other Currencies :
Major Currencies:
Nonfarm payroll data may affect other currencies such as EUR, JPY, and GBP. An inverse relationship between the USD and these foreign currencies is often seen.
Other Popular Currencies:
For other foreign currencies such as AUD, NZD, and CAD, the market often evaluates the impact of NFP reports on export results and commodity prices.
Stock Market and Futures Contracts (Future)
How have the stock and futures markets been affected by Nonfarm news?
NFP Report for Domestic Stocks:
Positive Growth:
Strong nonfarm news is often seen as a positive sign for economic health. Helps increase investor confidence and can lead to price increases in the stock market.
Concerns about Inflation:
A sharp increase in employment could fuel inflation concerns and increase the likelihood of banks raising interest rates. It affects the present value of cash flows in the stock market.
Futures and Commodities:
Oil Market:
Strong Nonfarm news is often seen as a sign of increased demand for energy, which can lead to price increases in the oil market.
Precious metal:
The volatility of the Nonfarm report could affect gold and platinum prices. When there are concerns about inflation, gold often becomes more attractive as a safe investment.
Effects on Interest Rates and Monetary Policy:
Interest Rate Increase:
When NFP is strong, there is pressure to increase interest rates, reducing the value of term assets such as bonds and affecting the value of assets in investment funds.
Monetary-Policy – Policies:
The resulting Nonfarm Payrolls could also put pressure on Central Banks’ monetary policy decisions. Especially when there are signs of strength or weakness in inflation and economic health.
International markets:
Impact on the Global Market:
The NFP report not only affects the US market but also has a global impact, especially for countries with strong relationships with the US.
Global Political Policy:
The results of the Nonfarm Report could have a major impact on the economic and political policy decisions of many countries, influencing decisions on taxes, spending, and labor policies.
Trading Strategy with Nonfarm News
What is an effective trading strategy with nonfarm payrolls?
Nonfarm Reporting Pre-Event Strategy
Join us in following some effective strategies below!
Market Research and Forecasting Nonfarm Payrolls
Evaluate Current Data:
Review other economic indicators and market conditions to get an overview of economic conditions.
Previous Data Analysis:
Review previous Nonfarm Payrolls reports to identify market trends and fluctuations as well as market expectations.
Determine Market Expectations:
Compare Forecasts:
Compare expert forecasts with current data to gauge the level of market expectations for the NFP report.
Market Sentiment Analysis:
Investigate market sentiment to understand how investors are evaluating events and determine market mood.
Building a Trading Strategy with Nonfarm News
Place Order Before Event:
Determine the order price and stop loss before the Nonfarm news event to avoid sudden fluctuations after the Nonfarm report is published.
Choose the Right Currency Pair:
Choose currency pairs that are closely related to USD to take advantage of volatility.
See more: Opening and verifying an ICMarkets account
Risk Management and Strategy After NFP Report
The first step you need to keep in mind is managing trading results!
Managing Trading Results:
Profit and Loss Control:
Determine your target profit level and acceptable loss level before starting to trade.
Stop Loss Adjustment:
Monitor market fluctuations and adjust stop loss in a positive direction.
Reaction After NFP Report Released NFP Report
Track Short-Term Volatility:
Monitor the chart and evaluate short-term fluctuations after Nonfarm news data is released.
Quick Response:
For unpredictable fluctuations, react quickly by adjusting your trading strategy.
Evaluating Strategic Effectiveness:
Reviewing Trading Results:
Evaluate the effectiveness of the strategy based on trading results and identify learning points from the experience.
Strategy Update for Next Event:
Learn from the experience and update your strategy for the next Nonfarm Payrolls event to further optimize risk and profit management.
Limit Psychological Risks:
Maintain a Calm Psychology:
Avoid making decisions based on emotions and maintain a calm mind to make smart decisions.
Market Sentiment Survey:
Master the market psychology after the Nonfarm report event to forecast the next trend. Adjust your trading strategy to changes in the situation.
Conclude
In today’s financial world, understanding Nonfarm news Payrolls is not only an advantage but also an important step in building a successful investment strategy. This not only helps investors make smart decisions before and after the report is released, but also helps them forecast market trends and adjust trading strategies based on this important information. Learn Forex Trading hope you have understood about Nonfarm news. With its great impact, it is truly a bright spot on the global economic map. It has highlighted the importance of labor market data in shaping the global economy and finance.
frequently asked Questions
Why is the unemployment index in the Nonfarm report important?
The unemployment index is often considered because it reflects the proportion of unemployed workers in the economy. The increase or decrease of this index affects consumer spending, inflation, and monetary policy decisions.
Why pay special attention to average hourly wage data
Average hourly wages are often considered an important indicator of wage conditions and inflationary pressures. An increase in this index can create pressure to increase interest rates and affect currency value.
Can NFP data predict the possibility of an economic recession?
Yes, the NFP can forecast a possible economic recession if the number of jobs suddenly declines. When businesses reduce employment, it can be a sign of a recession and potentially negative effects on the economy.
