A big hubbub has been made regarding the past two weeks. Last week it was interest rate differentials and the sharp decline of the US dollar. This week it is the death of Osama bin Laden, the Royal Wedding in Britain, and Golden Week in Japan (not to mention the celebration of Cinco de Mayo by the Spanish-speaking world is today). But have you forgotten the most impactful data release of each new month?
This week is the long-awaited Non-Farm Employment Change (Non-Farm Payrolls, or NFP) release from the US Department of Labor’s Bureau of Labor Statistics. This data release is perhaps the most important figure published by the US economy. More so than interest rate decisions. More so than inflationary figures. More so than industrial readings.
Non-Farm Payrolls is the primary gauge of the US employment sector. It carries the heaviest impact on the forex market since it is a direct line into the lifeblood of the American economy: jobs.
Yesterday’s NFP estimate by Automatic Data Processing Inc. (ADP) revealed a below-forecasted figure of only 179K jobs being added by the private sector. Tomorrow’s NFP report will factor in the same information but include jobs data from the public sector as well. It is a leading indicator of economic health and should never be disregarded, especially in these times of economic uncertainty.
Today’s rate statements out of Britain and the euro zone left many investors unsure about the timing of future rate decisions. The result has been a broad sell-off in the euro and British pound in exchange for safer assets like the US dollar and Japanese yen. Should tomorrow’s NFP data come below forecasts, this shift into safe haven investments may pick up steam, further boosting the USD and JPY. Don’t miss out on tomorrow’s NFP data release, it should be a doozy.
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Greg Holden is the Chief Market Analyst at ForexYard. Greg uses his detailed knowledge of fundamental and technical analysis to provide some of the leading market forecasts in the forex world today. A guest lecturer at forex symposiums and Chief Editor of ForexYard's analysis center, Greg brings highly detailed and easy-to-use market analyses to his clientele. He has been published on ForexYard's Trading Blog and affiliate websites. Greg holds degrees in Political Science and Economics from Missouri State University, as well as a Masters degree in Middle Eastern History.
