How US Non Farm Payrolls Work In Forex Signal Service

Pin It

There are many people involved in forex signal service do not realize how significant to the global financial markets the US Non-Farm Payroll happens to be. Many people ask me , ” why does the US jobs number each month led to ups and downs in the market?” To answer that question we must realize at what the US jobs number actually represents. This will show us why it can make markets move in a way nothing else can .

Each month, on the first Friday, the US Non-Farm payroll report is released . It is released by the US Bureau of Labor and Statistics or (BLS) and the things that it does measure, is the number of brand new jobs, excluding farming, created by the economy in the US the previous month. This announcement is so important because this number is a reflection on the health of the economy in the US, and thus affects the global economy as well. In reality , in the world, the US economy happens to be the largest and the single largest component that drives the US economy is consumer spending ; this actually totals at least 70% ! So , in forex signal service, because the weakness or strength of a currency in a country is mainly affected by the interest rates in the country , you need to take a look at what actually drives those rates ; or the US Federal Reserve policy on interest rates. Probably the most important data for the Fed to use is this job report in order to set their short term interest rates and because it works this way, often the Non Farm Payrolls report actually can, lead to quite a bit of volatility in various markets.

Why does this report have anything to do with the short term interest rates set by the Federal Reserve? That’s a good question ! If you have a strong jobs report that generally means that people are employed and resource utilization is high . This also means that companies are employing workers and workers, or consumers, are spending money on things like eating out, shopping for clothes, etc and all of these things drive the economy; they help to heat or grow the economy. When the economy is heating up more money is in circulation and inflation must be kept in check by the Federal Reserve. They can keep inflation in check and lower inflation by raising the short term interest rates, which cools the economy down, or they can raise inflation by lowering the short term rates, heating the economy up. As you can see, so a big factor is the jobs number, driving all of this beneath the surface.

The next time you are trying to prepare for a forex signal service day or the next week, remember to take a look at the events calendar for the fundamental information that is scheduled to be released that upcoming day or week. If you’re in the first week of the month then you’ll have the Non-Farm Payrolls report to look forward to on Friday of that first week since that’s always when it’s released.If you’re looking to take advantage of the volatility that comes after the release of the jobs report, just remember the following formula : If the number of jobs are stronger than anticipated, it usually means the economy is stronger which means higher short term interest rates that lead to currency strength . Oppositely, if you find the jobs report is weaker than it was expected to be then in most cases the short term interest rates will go lower leading to the weakness of the currency. It doesn’t always happen this cut and dried, but this knowledge can give you a bit of an advantage over your competitors who are trading alongside you.

About Author
David F Dacosta – Is a private trader using technical analysis to do forex signal service & futures trading. David makes specific trade recommendations for a small select group of traders. He uses drummond geometry to make his forecasts. Click Here for training materials and a free forex trading forecast.

Leave a Reply