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Non-Farm Payroll Reports as a Major Forex Indicator

Mar 28, 2008
The Unemployment Report, also referred to as the Non-Farm Payroll (NFP) Reports, is a major indicator of a country's economic health, and one of the most anticipated economic reports for investors in all markets, including the Forex.

The Unemployment Report may be released at different times for different countries, so make sure to know when this information comes out for whatever nations your currency pair is from. In the United States the Non-Farm Payroll Report is released on the first Friday of every month by the U.S Bureau of Labor Statistics, and often times will affect at least the short term action in the Forex market in regards to the U.S. Dollar.

This report, in the United States, includes roughly 80% of the paid workers in the country and excludes government, farm, and non-profit employees. This report is used as one of the biggest measuring sticks for a country's overall economic health, which logically will affect its currency strength and thus affect the Forex market.

That part is true of any country's non-farm payroll report, is that it is one of the biggest indicators of a nation's overall economic health and will almost always have an impact on investment and trading markets.

The Unemployment/Non-Farm Payroll Report is one of the major five economic reports for each country that traders jump on, the other four being interest rates, consumer price index, trade balance, and retail sales.

Even among all these, the unemployment report often gets the strongest attention, and is considered one of the most accurate economic indicators of a country's overall economic health, which makes sense. The more people who are working, the more currency you have being made and spent in a nation's economy.

You'll want to know when the reports are released. For example, if you are trading the US Dollar and Euro, then you'll need to know that the United States and European Union release different economic indicators on different days, meaning the unemployment report for the United States may come on a different day than the reports from the European Union. If you want to get the maximum information for this currency pair, then you'll want to know the information for both.

The same idea applies to the Japanese Yen, or any currency you're trading. You want to know when all the reports become available so you can stay on top of the current financial news and end up a Forex winner!
About the Author
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From Jason Fielder: Founder, ForexImpact.com
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