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DgTaFan
Automatic Forex Trading - A Look At US Non Farm Payrolls
Oct 20 2010, 10:07 AM EDT | Post edited: Oct 20 2010, 10:07 AM EDT
Most people who get involved with automatic forex trading do not realize how significant to the global financial markets the US Non-Farm Payroll happens to be. Many people ask me , "why does the monthly US jobs number make the market jump up and down so much after it is released ?" To give you an answer we must realize at what the US jobs number actually represents. Then we will have our insights as to why it makes the markets move like nothing else .

Each month, on the first Friday, the US Non-Farm payroll report is released . This report is put out by the US Bureau of Labor and Statistics and what it quantitatively measures , is the new job number, excluding farming , created in the prior month by the US economy . It is of such importance because this number is a reflection on the health of the economy in the US, and thus affects the global economy as well. After all , in the world, the US economy happens to be the largest and consumer spending is the main component driving the economy in the US ; actually making up 70%! Thus , in automatic forex trading, since the interest rates in a country is the main factor that affects the currency's strength or weakness, you need to take a look at what actually drives those rates ; or the interest rate policy set by the US Federal Reserve . The main piece of data that is used by the Fed is the jobs report to set short term interest rates and because of this, this report can and usually does , lead to quite a bit of volatility in various markets .


Why does this report have anything to do with the short term interest rates set by the Federal Reserve? A wonderful question! If the jobs report is on the strong side usually it means that people have employment and the utilization of resources is high . Do you find this valuable?    

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