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forex-signals-payroll
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What
impact does a higher non-farm payroll have on the Forex market? |
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Traders
are constantly monitoring various economic indicators to identify
trends in economic growth. Some of the most watched economic indicators
include the Consumer Price Index, housing starts, gross domestic
product and the employment report. Out of these indicators, the
employment report contains a variety of data and statistics regarding
the employment information of the market.
The employment report is released on the first Friday of every month by
the Bureau of Labor Statistics, providing data covering the previous
month. The report contains information on unemployment, job growth and
payroll data, among other stats.
Out of the payroll data that is provided, the most important statistic
that is analyzed 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. This data is analyzed closely because of its importance
in identifying the rate of economic growth and inflation.
As with other indicators, the difference between the actual non-farm
data and expected figures will determine the overall effect of the data
on the market. If the non-farm payroll is expanding, this is a good
indication that the economy is growing, and vice versa. However, if
increases in non-farm payroll occur at a fast rate, this may lead to an
increase in inflation. In forex, the level of actual non-farm payroll
compared to payroll estimates is taken very seriously. If the actual
data comes in lower than economists' estimates, forex traders will
usually sell U.S. dollars in anticipation of a weakening currency. The
opposite is true when the data is higher than economists' expectations.
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