Happy Friday, traders! Are you ready to trade at the end of the week? Here’s what you need to know before you start:
Will NFP affect USD?
What will happen?
On March 4, 2022, the US Bureau of Labor Statistics will publish average hourly earnings, nonfarm employment change (nonfarm payrolls – NFP), and, most importantly, the unemployment rate. This report is usually published monthly, often on the first Friday of the month. Average hourly earnings and nonfarm payrolls don’t include the farming industry’s data due to its seasonality.
The Federal Reserve System (the US central bank) considers all of these indicators when making its decisions, especially the unemployment rate, which represents the overall economic health.
How will it affect the dollar?
The US highest unemployment rate was in May 2020, at the COVID-19 peak. Many people lost their jobs, and the rate went up from 4.4% to 14.7%. Now it’s close to pre-pandemic times. In February 2022, this rate was 4.0%.
On February 4, 2022, the last release was a little higher-than-expected, 4.0% vs. 3.9%. As for NFP, the result was much better than expected, 467K vs. 110K.
Apparently, every release is entirely different from the forecast, which means it’s difficult to make accurate predictions. So, the unemployment rate can influence the US dollar a lot. After the last month’s release, the USD boosted and held high for several days.
How to trade on the NFP release?
If the actual rate is higher than expected, it’s good for currency. However, pay attention to other indicators as well.
This rate can strongly affects the market as the job creation is a leading indicator of consumer spending and, therefore, economic activity in general.
- If actual numbers beat expectations, USD will go up.
- Otherwise, it’ll fall.
Check Economic Calendar.
Instruments to trade: EUR/USD, USD/CAD, USD/CHF.
Now traders follow the economic events with new vision as inflation in the US seems like decreasing. Let’s see what releases will influence the market due to that factor.
The week will have the biggest event in the US political process over the last two years. How will the elections affect the Forex market? We covered the most important news of this week in this report.
S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.
The United States Bureau of Labor Statistics will publish the US Consumer Price Index (CPI) m/m on January 12 at 15:30 GMT+2. The index measures a change in the price of goods and services purchased by consumers.
2022 was rough: inflation, energy crisis, and plenty of other controversial situations…