Non farm payrolls
Trading on the news is a very dangerous and requiring just steel nerves. But with a competent selection of news, this tactic can bring a lot of money in minutes. Today we will talk about how to use Non Farm Payrolls in trade - the second most important data from the economic calendar.
The most important information that can determine the fate of a currency pair in the medium term includes Non Farm Payrolls. The concept of Non Farm Peirols takes into account the volume of jobs created in all sectors of the economy except the agricultural sphere.
Publication is scheduled for 9.30 a.m. local time, every first Friday of the new month. In addition to unemployment, information on accrued wages, the number of hours worked and the average hourly wage is taken into account. Since the US is the world 's leading power, data describing economic health is essential for exchange weekly trading system entities.
Nonfarm Payrolls reports wages and the number of additional jobs not only for the current period, but compares with the previous period. Statistics can influence both foreign exchange quotations and the value of gold, oil and other goods. The total non-agricultural earnings fund is about 79% and forms the gross domestic product.
Often, the published information is not final, but is adjusted in the next reporting period. When the Non Farm Payrolls report comes out, increased market volatility is possible. Depending on whether the statistics coincide with investors "expectations or not, different scenarios of players" reaction are permissible.
Statistics on non-agricultural wages and employment show which sectors generate the greatest gains or losses. Non Farm includes all kinds of services, retail and wholesale trade, financial activities, resource extraction, health care, construction, goods production, transportation, warehousing, informatization, entertainment, tourism.
The Nonfarm report, in addition to the industry delineation, contains additional elements, such as the size of the average working week and hourly wage earned, as well as changes from the previous month. During the publication of the report, certain patterns can be identified. As a rule, the best growth of employment and income of the population is observed in May, and the largest reduction should be expected in August. The best year in the history of observation was 1994, then managed to add 3.84 million jobs. The worst considered 2009, the next after the global economic crisis, left 5.04 million Americans unemployed.
Nonfarm Payrolls becomes public at the beginning of the month and is able to set the motion vector for the entire reporting period, with appropriate support from other releases. As the major provider and consumer of global resources and services, the US has a decisive impact on the global financial system. It can be said that consumer activity of citizens of this state regulates production in third countries.
Non Farm Payrolls is subject to close scrutiny because it is the main indicator describing job creation in the United States. One of the main tasks facing the Federal Reserve System is to maintain the level of employment of the population. The emergence of a large number of vacancies makes the national currency attractive for investment, and the low one, on the contrary, implies the outflow of investments. Job creation is pushing the Fed to tighten monetary policy and raise interest rates.
After the country did not count 5 million workers, as a result of the 2008 global crisis, the US refinancing rate was reduced to 0%. The Fed closely followed the data of Non Farm Peirols and identified the main condition for raising the rate, achieving unemployment of 5%. With high employment and rising incomes, the need to stimulate the economy is declining, and the time for cheap money is coming to an end.
If you follow the publication of statistics, you can make assumptions about whether or not analysts will exceed the expectations of fresh data non pharm, based on the accompanying tools of fundamental analysis.
Rising incomes raise inflation expectations, which in turn provide additional grounds for raising interest rates. Positive dynamics over a long period increase pressure on the regulator, which in turn affects the exchange rate growth of the currency.
But even before the nonfarm is published, we recommend that you pay attention to information such as the University of Michigan Consumer Trust Index. The decline in this indicator almost always marks a decrease in the number of jobs created compared to the previous segment. The growth of the ISM production index is also an indicator that can hint at what the employment data will be. The time of non farm release in Moscow is scheduled for 15.30 on the first Friday of the month. It should not be forgotten that after the publication of the information itself, it follows the speech of the head of the Federal Reserve, who makes comments on the published data. Many investors wait for this speech, and only after it make a trade decision. This factor is related to the movement in currency pairs, which does not end until the end of the weekly trading system session. If there are no statistics that differ greatly from experts "expectations, fluctuations in the first hour range from 2 to 10 points, but by the time the sites close, they reach 50 units.
The release date of Nonfarm Payrolls is not chosen by accident and is intended to ensure stability on the currency exchange. So in case of sharp deviations from the expectations of forecasters, the exchange will close for the weekend before emotional factors can influence the exchange rate of the currency pair. The Fed chief 's speech comes when a matter of hours remain before closing, reducing speculative impact in the thin market. These are preventive measures in case of crisis phenomena, in a stable economy their effect is leveled.
Most Forex strategies do not recommend trading during the publication of important statistics. This is especially true of Non Farm Peerolls. Profits on deals already open could disappear in a few five-minute Japanese candles, with appropriate news background support. The high volatility is related to the initial reaction of players to the published information and the subsequent reaction after a detailed study of the report. The third wave comes after comments by the head of the US monetary department.
Thus, with positive data on the creation of a large number of new jobs, the market may take a long position on the dollar. This will lead to a sharp rise in the US currency. After a detailed analysis, it may be that the average wage has decreased. Labor week decreased from the previous Non Farm Payrolls reporting period. In addition to all information for the previous month can be revised for the worse. And in the explanations, the head of the fedreserva will report on the long-term maintenance of the interest rate at the current level until inflation meets the needs of the economy. Inflation is directly linked to hourly wages, as its growth leads to greater purchasing power of the population.
All the factors described influence the volatility of assets traded in pair with USD. The initial reaction to Non Farm Peirols may not only be blocked during the subsequent wave, but a new local extremum may be reached. And comments by the top official later, will bring the pair back to parity that existed before the report was released. The analysis of information is a complex process, which requires consideration not only of the final figures, but also of the full report on all sectors of the economy. Only then will you be able to predict the reaction of most traders with sufficient probability.
In conducting fundamental analysis, technical factors should not be forgotten. So big financial players can use the movement on Nonfarm Payrolls news to enter the deal on better terms. By applying myforex deferred warrants, they sell/buy the currency instrument at the price they want. The moment an ordinary investor, convinced of the formation of the Price Action pattern, makes a deal, the market unfolds and goes in reverse. Options, support/resistance zones, Fibonacci lines are very important in working on the news, which is where a reversal or correction is possible.
Often, the goal of the news movement is to reach a level from which it is best to either deploy the market or finish the correction and continue moving in line with the global trend. There are several trading strategies on Non Farm Payrolls news, let 's look at how you can make a profit.
Example of USD purchase login.
NFP data should be better than investors 'expectations for all items, and the previous reporting period should be revised for the better.
The entrance takes place after the formation of a beautiful five-minute candle with a large body and small shadows after the publication of Nonfarm Payrolls at 15.35 Moscow time.
The compensation/loss ratio must be at least 1:1.
The target is the closest significant local maximum.
Move Stop Loss to break-even and close half of the open deal when the goal is reached.
If you are interested in Nonfarm myforex what it is, what time it comes out, how it affects the positioning of weekly trading system participants, and how this information can be used to your advantage, come to study at our Academy. We will tell about the secrets of the exchange and teach to apply the most profitable trading strategies, including to work on the news.