Be Prepared! US Non-Farm Employment Change Tomorrow At 13:30 GMT.
January 7th, 2010 Posted in In-Depth Analysis, Market Movers
We at ForexYard encourage our customers to get involved in the most intense market events. As such, we think you should know that U.S. Non-Farm Employment Change figures are expected tomorrow, Friday, January 8, at 13:30 (GMT), and you need to be prepared. Market events like this one tend to create either big changes to current trends or push current trends even further. Generally, the Majors are the ones most affected by market events in general, but Crude Oil, Gold prices, and even the price of Silver can change dramatically in the seconds after such a publication. For more information about the U.S. Non-Farm Employment Change, please read below.
What is the Non-Farm Employment Change Report?
The U.S. Non-Farm Employment Change, also known as “Non-Farm Payrolls” (NFP) and the “Employment Report,” is a monthly economic indicator used to measure the change in the number of employed people, excluding the farming industry. Each month, the Current Employment Statistics Program surveys about 150,000 businesses, representing approximately 390,000 worksites, in order to provide detailed industry data on employment, work-hours, and earnings of workers on non-farm payrolls for all 50 U.S. states. The survey is then published on the first Friday of each month.
The NFP is an important leading indicator that also affects consumer spending, which accounts for a majority of overall economic activity. Traders value the indicator with the highest importance as its early monthly release can set the tone for the rest of the month’s market movement. Investors should also note this past Wednesday’s release of Automatic Data Processing Inc.’s (ADP’s) estimate of Non-Farm Employment Change. In the past, ADP has provided an accurate assessment of what was to come from the actual NFP release two days later. With the volatility of world economies in recent months, however, ADP has not been able to correctly estimate the Non-Farm Payroll outcome, only strengthening the real power behind Friday’s news release.
Also included in the release by the Bureau of Labor Statistics will be the national unemployment rate. The previous month registered a rate of 10%, marking a jump of 5.8% from the year 2008. Now the jobless rate is expected to climb higher to 10.1% and remain there for the first half of the year.
What Results might Push the USD Up?
If the actual figure will be higher than forecasted, meaning the actual job loss is higher than expected, traders are likely to see a bullish run to the USD. Currently, investors’ sentiment is bearish on the USD as it appears that the U.S economy is finally coming out of recession. However, in the situation where the survey delivers worse than expected figures, such as -9K instead of the forecasted -3K, investors might be compelled to reevaluate their strategies and go long on the USD as a safe haven investment. In this turn of events, the USD will likely halt its recent bearish movement, and the EUR/USD could drop to a price level of 1.4215 immediately following this release.
What Results might Take the USD Down?
Expectations for this month reveal that the Non-Farm Employment Change figures are forecasted to improve from last month’s -11K, with a release of -3K. While still a negative figure, it nonetheless indicates a relative stabilization in employment in the non-farming sector.
Better than expected results, or results that come in-line with market expectations, are likely to intensify the current bearish trend on the USD as it will provide further indication for investors that the global economic environment is improving. As the USD is viewed as a safe haven currency which tends to gain in times of financial turmoil, the recent optimistic mood has been putting downward pressure on the Dollar; a sign that employment in the U.S is finally stabilizing will likely intensify the pressure, pushing up the EUR/USD pair perhaps to the 1.4520.
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Tags: employment report, Non-Farm Payrolls, U.S. Non-Farm Employment Change
