Non-Farm Payrolls, or the NFP as it is called, is the most important economic release out there and this one brings higher levels of volatility on the currency markets, and not only: equity and bond markets are highly influenced, as well as monetary policies the Fed is applying on the economy.
Especially now when the state of the US economy is in the hands of the central bank with the stimulus program that is running and is linked to the jobs creation, this kind of data makes traders highly sensitive to any changes.
NFP shows the change in the number of employed people during the previous month and it is a vital economic data, again, because jobs creation is directly linked to consumer spending which instead accounts for a majority of overall economic activity.
According to our six month data that we’re analyzing here there is a clear rising trend in jobs creation that started this April 2013 and continues through July included. This brings pressure on the Fed to start the tapering process on the QE program, and this means stimulus reduction because improved levels for the economy.
From the indicators we’ve analyzed so far, ISM non-manufacturing and this NFP are by far the most important ones and based on the past six months data there is a sign of improved economic conditions, so tapering in this September, like is the chat on the markets, should not be ruled out.
The most important things to take into consideration when looking at Non-Farm Payrolls indicator are:
- Release date: monthly, first Friday after the month ends;
- Release time: 12:30 GMT during North American session;
- Actual>forecast = positive for currency;
- Actual< forecast = negative for currency;
- High levels of volatility;
- High impact on markets and future monetary policies.