The Non-farm payroll (NFP) is a monthly measure of the United States labor market health, released every first Friday of the month by the Bureau of Labor Statistics. It is a key economic indicator for the United States economy and among the most market-moving data points for the US Dollar, US equities, Treasuries, and Gold.
Basically, macroeconomics fundamentals indicate that there is a strong correlation between the Fed monetary policy and the labour market. The federal reserve in an effort to bring down the looming high inflation from 9 percent to an optimal level of 2 percent is maintaining a hawkish tone.
Lately, reports from economic analysts relayed that the federal reserve interest rate hike is having a punchy negative effect on the US labor market. However, the compounding effect was positive for the US dollars as the currency gained massively and ascended to a multi-year high.
Unfortunately, the strong US dollar against other currencies has been negative for the job market. On a global scale, the massive effect was seen crushing other nations’ currencies across Europe, Asia, and Africa to a relative year low.
Due to that, all economic sectors that rely on exportation are experiencing a growth decline as a result of the external demand crunch. The manufacturing sector is one of the most hit as it relies majorly on exportation. Therefore, in order to maximize cost, employers are cutting down their employees and hiring is on a decline.
Recently, an economic release indicated that the US exports experienced two consecutive months of decline by 3.7 percent and 1.6 percent respectively. The ISM Manufacturing Purchasing Manager’s Index contracted to 50.9 from 52.8 previous.
Today, One-third of American exports are high-skilled services like consulting and finance. A lot of businesses that sell goods and services globally are experiencing slow sales and slow employment growth as the Fed rate hike strengthens the already strong U.S. dollar.
Furthermore, other segments of the economy are not left out of the curve. Generally, high-interest rate environment has proven to make business loans more expensive and harder to come by. As a result, companies are experiencing growth contraction and job hiring is at a slow pace.
The unemployment rate climbed to 3.7 percent, the highest level since February 2022.
The positive is that, safe-have trading instruments like Gold(XAUUSD) and EUR/USD are recovering speedily as traders foresee recession in the near term.
In response to recession fears, the US stocks and equity market experienced a volatility rush. Also, the cryptocurrency and the gold commodity markets were not left out of the bullish run as risk aversion sets in and traders hop for safe-haven.
Technically, as risk premium keeps building into the market with uncertainty, gold and cryptocurrency asset class should be added to your portfolios as they have significantly proven to be a store of value over time.
Lately, Gold (XAUUSD) made massive pullback gains from the $1617 low to $1725 price level at the time of writing this article. This price increase helped erased some swift losses. In the near term, gold (XAUUSD) has the potential of breaking the $1,800 mark and possibly hit the $2,000 resistance point in the longer term.
In the cryptocurrency space, BTC/USD is up 20,400.49 from its $18,577 previous multi-days low. Altcoins such as Ethereum (ETH/USD), Ripple (XRP/USD), and Litecoin (LTCUSD), were not left out of the growth curve as they are seen hitting multi-days highs.
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 they are mostly affected by the data release; BTC/USD, ETH/USD, XRP/USD, LTC/USD EURUSD, GBPUSD, XAUUSD, XAGUSD, XPTUSD, XPD/USD USDJPY, USDCAD, USDCHF, AUDUSD, NZDUSD, US30, US100, USOIL, US Oil, Facebook, Amazon, Tesla, etc.
Time Schedule for next NFP release:
Date: 7th October, 2022
Time: 1:30 pm (GM + 1)
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