Non-Farm Payroll: Key Fundamentals Indicating Strong Labour Market, US Dollars Gaining Across-Board.
Non-Farm Payroll is Published by the US Department of Labour and it gauges the United States labor market health which is a major economic indicator that impacts the US dollar, equities, gold, and many other financial instruments.
Last month, the Non-Farm Payroll positive release stood as a catalyst for the US dollar’s massive gains. The strong data point drove the US Dollar Index to the upside by a wide percentage margin, with the currency ascending to a multi-year high against its most liquid counterpart, the EURO hitting 0.99145 to 0.99990 price level below parity at the time of writing this article. This price mark has not been seen since 2002.
The USD recovery curve was triggered by the strong job data release of +528k, more than the market forecast of +250k. This was a huge progression in the job recovery curve.
Lately, the Federal Reserve Chair, Jerome Powell speaking on the state of the job market and economic outlook at the Jackson Hole Symposium said,
“Labor demand is very strong; job participation rate remains solid and the American economy is very strong and well-positioned to handle tighter monetary policy.
Job gain is robust in recent months; unemployment rate remains low and businesses keep hiring with increased output and the Federal Reserve core objective of full employment is met”.
Following Powell’s speech, the U.S. dollar gained massively across the board near a two-decade peak against a series of major currencies. The bull run is expected to remain extended in the long term as the federal reserve stick to its gum on tighter monetary policy.
The aftermath of his hawkish statements rattled the stock market, commodities, indices, and the cryptocurrency market crashing down to multi-month lows. This swing into action was in an effort toward economic normalization and to drag the looming inflation down to its optimal range of 2% to 3% point. However, the dollar keeps gaining across the board and retains its position as the global reserve currency as traders shift away from risky asset to investing in US dollars.
On the business spectrum, the narrative of the strong US Dollar will probably have a negative impact on businesses in the near term as declining export orders sets in. Also, the responses from business executives were progressively deteriorating as this is hurting many businesses and companies. This could trigger another phase of recession in the near term and provides an opportunity for investors to invest in safe-haven assets like gold (XAUUSD) and cryptocurrency (BTC/USD, ETH/USD, XRP/USD).
Historically, stronger US stock markets and higher commodity prices were usually supported by a strong US jobs market. However, there is a downside potential risk for the US Stocks Market and commodity prices as a result of healthy job market reports and tighter monetary policy. However, US Dollar will keep gaining across the board.
Nevertheless, Traders should brace themselves up for a period of high volatility as an increase in Non-farm Payroll will strengthen the USD while a decrease will weaken the USD.
In response to the news release, trade the financial market with the following trading instruments on the ACT Brokers platform(actmarkets.com), as the pairs are mostly affected by the data release; BTC/USD, ETH/USD, XRP/USD, EUR/USD, GBPUSD, XAUUSD, USDJPY, USDCAD, USDCHF, AUDUSD, NZDUSD, US30, US100, USOIL, Facebook, Amazon, Tesla, etc.
Time Schedule for the NFP release:
Date: Friday 2nd September 2022
Time: 1:30 pm (GM + 1)
Author: Amogo Solomon
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