Fundamental Analysis-Impacts of Non Farm Payrolls Data on Forex Market

Non farm payrolls in the US increased by 164 thousand in April of 2018, following an upwardly revised 135 thousand in March and well below market expectations of 192 thousand. The most important payroll statistic that is analyzed from the report is the non-farm payroll data, which represents the total number of paid U.S. workers of any business, excluding general government employees, private household employees, employees of nonprofit organizations that provide assistance to individuals, and farm employees.

Non Farm Payrolls Indicator

The Non Farm Payrolls indicator measures the net change in the number of people employed within the U.S. economy in jobs other than those which are farming or agriculture related.
When the NFP data is rising, it means businesses within the United States are hiring more staff, usually in response to improved economic conditions and increased demand for their products or services either domestically or overseas.Furthermore, growth in the number of employed people in an economy tends to boost that economy since employed people tend to spend more and hence stimulate the economy, which in turn tends to create even more jobs. This contrasts with unemployed people whose spending patterns tend to contract.

When Non Farm Payrolls Release

Non farm payrolls is an employment report released monthly, usually on the first Friday of every month, and heavily affects the US dollar, the bond market and the stock market. Current Employment Statistics (CES) program from the U.S. Department of Labor Bureau of Labor Statistics, surveys about 141,000 businesses and government agencies, representing approximately 486,000 individual work sites, in order to provide detailed industry data on employment, hours, and earnings of workers on non-farm payrolls.

Impacts of Indicators 

As with other indicators, the difference between the actual non-farm data and expected figures will determine the overall impact on the market. If the non-farm payroll is expanding, this is a good indication that the economy is growing, and vice versa. 

Hence,the Non Farm Payrolls indicator provides economists and traders with one of the most important pieces of information with which to gauge if the U.S. job sector is growing healthily or contracting in a less favorable employment environment.Higher than expected NFP numbers tend to raise the valuation of the U.S. Dollar relative to the currencies of other countries, while lower than expected NFP data tends to lower the U.S. Dollar’s relative valuation.