US Nonfarm Payrolls
The US labor market statistics is the most dangerous indicator. It can easily both to gild you and to undress you. The market is volatile in relation to US Nonfarm Payrolls, as the market is constantly changing its focus on its different data: today the market likes the percent unemployment, and tomorrow it is more interested in the volume of wages. You should be so changeable and flexible too because it is for this reason that Non-Farm spikes on the market, that's why a “saw” of quotes occurs when traders rush out in stops in minutes.
Features of the publication
(!) Hot Season Sale
How to trade US Nonfarm Payrolls
If the data exceeds the forecasts, the USDJPY trading pair grows.
Non-FarmPayrolls (shortly NFP) continues to hold the leading position in the rating of not only popular but also dangerous indicators. Its large amount of data coming to the market can easily cause the spike of quotes, swinging the price up and down.
The headliner publications are Employment Change, published first among the others, but the market is not ready to consider it alone, the market uses an integrated assessment, and the NFP plays a less important role in it.
The US labor market statistics include such indicators:
- US Unemployment Rate
- US Nonfarm Payrolls
- US Average Hourly Earnings [y/y]
- US Average Hourly Earnings [m/m]
- US Average Weekly Hours
- US Labor Force Participation Rate
- US NFP Revised Data
The most attention is attracted by Nonfarm Payrolls, Unemployment Rate, and Average Hourly Earnings.
The sensitivity to the degree of deviation of the fact of NFP from its forecast is now blurred!
In other words, it is not necessary that there will be a large movement at large deviations of Nonfarm. All movements at the time of the publication of the indicator are based on an integrated assessment of indicator statistics. You practically play cat and mouse at this moment with only one NFP, when there are at least four important indicators in the game.
The main rule for a strong and directed movement on Nonfarm is the synergy of all indicators: the quantitative growth of employed, percent unemployment, and, most importantly, the dynamics of wages.
The critical moment for the percent unemployment is the level of 5% or the level the Federal Reserve System will set during its meetings of the FOMC regulatory committee. When unemployment falls below the stipulated level, it becomes uninteresting for the markets and can be interesting only in case of the reverse growth to the target level or as a result of sharp and significant deviations.
The market shows a good reaction to the deviation of the fact of the Average Hourly Earnings indicator from the forecast at deviation levels of +/- 0.2%.
It is generally accepted that the 200K growth is central to the Non-Farm Payrolls. This indicator of the increase in the number of employed people can push the country's GDP by 3%. Note that at the time of publication, the data of the previous release is revised, which also affects the markets sentiment.
What conclusions can be drawn?
- To trade indicator, you need its integrated assessment
- The Non-FarmPayrolls and UnemploymentRate will be published first, and then, after milliseconds (sometimes up to 2 seconds) data on wages.
- Markets most often ignore deviations in unemployment to a level of +/- 0.2%
- Spike of the market most often occurs when NFP shows one way, and salaries show quite different way
- In case of weak deviations of the fact of NFP from its forecast, the market also likes to take into account the revised data of the previous release. For example, if the Non-Farm deviation is up to +/- 40K with the revised data of the previous release +/- 20K, this can significantly affect the reaction – to weaken it in the case of versatile data and to strengthen it in the case of unilateral data.
What can be done?
For trading, we will use the system of conflict prevention between NFP and Unemployment Rate, which are virtually published simultaneously. All other data comes later. The first reaction is always to the NFP, the second one is to everything else. Respectively, with a bad entry level, you just may not have time to get, in case of a reverse market reaction, the data of the revised previous release and salary data.
The labor market report is very popular and its popularity is constant, but it is quite difficult for beginners. Many people just do not understand what is happening in the market at that moment.
We could recommend you to use the minimum lots or give up trading if you don’t have experience in news trading at all or you do not know how your broker will behave.
History of publications
If you suddenly forgot how dangerous is NFP and how crucial it's to use the conflict prevention system in this case, then pay attention to the weekly review from the beginning of October (immediately posted after the previous release).
(We had No Trade according to conflict)
Here is some quote Non-Farm Shocked A Lot Of People This Friday
Markets nervously awaited the publication of the statistics of the US labor market, as amid expectations of an increase in the Fed's interest rate in December, they would like to receive confirmation of the improvement in the growth dynamics of wages ... and the markets got what they wanted, while managing to throw out of the game all those who followed NFP figures at the time of publication of the data, which in turn proved to be insignificant conflict with the data on the increase in wages.
US Average Hourly Earnings (M/M) 0.5% against 0.3%
US Change in Nonfarm Payrolls -33K against 80K (to SELL)
And watch this opposite reaction
OPPOSITE TO THE DEVIATION OF NFP
In other words, NFP showed to sell, but in fact, the pair grew up!
THE CONFLICT PREVENTION SYSTEM NEED TO BE ON.
Recall that a trading signal can be canceled in this case because of the conflict, and because of the time delay between indicators
If you suddenly forgot how dangerous is NFP and how crucial it's to use the conflict prevention system in this case, then pay attention to the weekly review from the beginning of October (immediately posted after the previous release).... Full comment