What isThe NFP and Effect on USD and Gold

The Importance of the NFP in Financial Markets

The NFP, or non-farm payroll report, is a key economic indicator that provides insight into the health of the US job market. This report is closely watched by investors and traders as it can have a significant impact on financial markets.In this article, we'll explore what the NFP is, why it's important, and how it can affect the economy and financial markets.

What is the NFP report?

The NFP report is a monthly report released by the US Bureau of Labor Statistics that provides data on the number of non-farm jobs added or lost in the previous month. This report includes information on industries such as construction, manufacturing, and healthcare, but excludes jobs in agriculture and government. The NFP report is considered a key economic indicator as it provides insight into the health of the US job market and can impact financial markets.

How is the NFP report calculated?

The NFP report is calculated through a survey of businesses and government agencies, which is conducted by the US Bureau of Labor Statistics.

The survey asks employers to report the number of employees on their payroll during the pay period that includes the 12th of the month.

The data is then analyzed and adjusted for seasonal variations, such as holiday hiring or summer layoffs, to provide an accurate picture of the job market. The resulting report is released on the first Friday of every month and is closely watched by investors and traders for its potential impact on financial markets.

Why is the NFP report important to financial markets?

The NFP report is important to financial markets because it provides a snapshot of the health of the US job market.

Investors and traders use this information to make decisions about buying and selling stocks, bonds, and other financial instruments.

A strong NFP report, indicating a healthy job market, can lead to increased investor confidence and a rise in stock prices. On the other hand, a weak NFP report, indicating a struggling job market, can lead to decreased investor confidence and a drop in stock prices. Therefore, the NFP report is a key economic indicator that can have a significant impact on financial markets.

How does the NFP report impact currency markets?

The NFP report can also have a significant impact on currency markets. A strong NFP report can lead to an increase in the value of the US dollar, as investors become more confident in the strength of the US economy.

This can make US exports more expensive and less competitive in global markets.

On the other hand, a weak NFP report can lead to a decrease in the value of the US dollar, as investors become less confident in the strength of the US economy. This can make US exports more affordable and more competitive in global markets. Therefore, the NFP report is closely watched by currency traders and can have a significant impact on exchange rates.

What are some strategies for trading the NFP report?

There are several strategies that traders use when trading the NFP report. One common strategy is to wait for the release of the report and then enter trades based on the initial market reaction. For example, if the report is stronger than expected, traders may enter long positions on the US dollar. Another strategy is to use technical analysis to identify key levels of support and resistance and enter trades based on price action around these levels. It’s important to remember that trading the NFP report can be risky and traders should always use proper risk management techniques to protect their capital.

How the US Non-Farm Payrolls (NFP) can affect the USD and gold.?

Non-Farm Payrolls (NFP) are one of the most important indicators of the labor market in the United States. These figures are seen as a barometer of the country's economic health and their impact is felt in financial markets worldwide. The month of March has generated great expectations, given the low US economic data in recent weeks. The NFP report for March will be released on Friday, April 7 at 15:30 GMT+3.

It is expected that the employment figures will not be as good as those of February, where 311,000 jobs were created. Forecasts indicate that in March, employment growth will be only 211 thousand jobs, which would mean lower growth. In addition, the unemployment rate is expected to have no significant changes and remain at 3.6%. However, there is some data to suggest that the numbers could be even lower than expected.

For example, the ISM manufacturing employment measure released on Monday came in at 46.9%, the lowest level since July 2022.

Similarly, the ISM service employment measure released yesterday fell to 51.3, below forecast and below forecast. the February measurement, although it continues to indicate expansion in the sector, as it remains above 50. 

Finally, the change in ADP employment fell to 145 thousand below expectations. If the NFP employment numbers come out lower than expected while the unemployment rate remains unchanged, a negative USD reaction is likely. This could boost purchases of gold and other USD counterparts, including US stock indices.

Likewise, if the NFP jobs numbers beat expectations of 211k, but the unemployment rate rises above 3.6%, we will also have a negative USD reaction.

On the other hand, if the numbers are better than expected but there are no negative changes in the unemployment rate, we will have a favorable reaction towards the USD. 

It is important to note that the impact of NFP employment numbers on financial markets can be highly volatile. Since tomorrow's release is made on a day with markets closed, a high-risk scenario is generated during the release. 

It is possible that the markets experience gaps in the price that exceed the loss limits generating losses greater than expected, so prudence is suggested in Forex trading during the event.

Technical analysis

Dollar DXY Index

It has experienced a bullish correction after leaving a trap above Tuesday's support at 101.46. The bearish continuation will seek not only to break the buy zone that caused the correction around 101.59, but also the support at 101.46 to extend the decline towards 101.00. However, if the pullback fails to make a new low below the 101.46 support and reacts to the buy zone, bulls may activate to continue bullish towards the 102.17 resistance, discounting at least 50% of the fall from week. 

EURUSD

It continues within the bullish sequence although consolidated, so that if the purchases reach yesterday's sales zone around 1.0959 and fail to create a new maximum on the 1.0973 resistance, the bears of the pair will be activated to take the prices towards the weekly open at 1.0841 and challenge support at 1.08. On the other hand, if the prices break the resistance at 1.0973, it is possible that the bulls continue to extend the purchases towards 1.1033. 

 

XAUUSD

Given that there will be no gold quotes tomorrow, Friday, April 7 (Good Friday), it is not ruled out that price gaps may be observed for the opening of Monday the 10th. In any case, our analysis of gold will consider the 4-hour chart to estimate a possible shift between today and Monday. 

The pair continues in an uptrend but as long as the price remains below the 2031.64 resistance, we will consider the start of the next corrective phase with short-term targets at 1990.16 and the weekly opening at 1972.57 . 

The decisive break of the 2031.64 resistance will extend the purchases towards 2050. The RSI in positive territory suggests the possibility of a brief rally, entering overbought, from where we can consider the beginning of the bearish correction.

People Also Ask

What is The NFP and Effect on USD and Gold?

NFP stands for Non-Farm Payrolls, which is a report released by the US Bureau of Labor Statistics that provides data on the number of jobs added or lost in the US economy (excluding farm workers, private household employees, and non-profit organization employees). The NFP report is closely watched by investors and traders as it can have a significant impact on the value of the US dollar and gold prices. A higher-than-expected NFP number can lead to a stronger US dollar and lower gold prices, while a lower-than-expected NFP number can lead to a weaker US dollar and higher gold prices.

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