Some people who do forex trading quite care about fundamental data. So, data on changes in the number of workers in a country is certainly one of the keys to driving the country's currency exchange rate. It could be good or bad news.
Payroll data that the forex market always awaits is the US Non-Farm Payroll (NFP). This data usually has a high impact on the US Dollar. In this position, many traders take advantage of the high volatility when the US-NFP data is released to reap profits.
According to Didimax forex broker, US-NFP is a report that measures growth regarding US workers in all sectors except agriculture, self-employment, domestic workers, military, and intelligence agencies. This data was published by the U.S. Bureau of Labor Statistics together with the unemployment rate report.
How Important US-NFP Data in Forex Trading
US-NFP data is released monthly on the first Friday of the week. It includes the average amount of time worked and the average income per week for part-time workers. In general, this report displays data on changes in the number of employees compared to the previous month.
It’s used to predict the economy of a country. This report contains many valuable clues about labor and has a direct impact on the capital market, the USD exchange rate, and also the price of gold. The best forex broker recommends US-NFP data as fundamental analysis indicator.
US-NFP is the main tool used to determine the general health of the US economy. As well as predicting circumstances in the future. US-NFP total includes approximately 80% of the total number of workers who have a share in shaping the GDP (Gross Domestic Product) of the US.
With this data, policymakers always consider labor data to make important decisions. If there are more jobs open at that time, the better the NFP figure. Business conditions will also improve with increased investment and recruitment of workers.
The Effect of US-NFP and Other Economic Data on Forex Trading
Forex traders who are quite happy to analyze fundamental data usually monitor various economic indicators for clues about the direction of a country's economic growth. Apart from the US-NFP, several other economic data are usually monitored by forex traders.
These data include the Consumer Price Index (CPI), housing data, Gross Domestic Product (GDP), initial jobless claims, and many more. CPI is a fundamental indicator used by many countries to measure the rate of inflation and is used as a benchmark for policy.
CPI is usually released monthly and has a high impact on currency values. Central banks commonly determine policy directions that have a high impact on financial markets because of CPI performance. CPI data from countries of major currencies is the frequently awaited forex trading news list.
US housing data is one of the most comprehensive property data. Periodically, there are several company data releases which each have a low, medium, and high impact on the financial market. However, there are times when housing data has a bigger impact than usual.
GDP is the most important indicator used to measure the economic growth. The GDP figure expresses the total value of goods and services produced by a country in a certain period. The nominal is calculated by adding up all investment, total consumption, government spending, and exports/imports.
If the US-NFP figure increases, it could be an indication that the US economy is growing and vice versa. However, if the growth in the US-NFP figure is very high and fast, this could also be an indication that the inflation rate will also increase.
Therefore, if the US-NFP is published higher than expected, the forex market speculators will usually prefer to buy USD which will cause USD to strengthen, and vice versa. This usually volatile USD movement is what many people use to seize profit opportunities in forex trading.
