Original article Seberapa Besar Pengaruh NFP terhadap USD dan Emas?
Those of you who have been trading over a period of time, say a few months, have most likely heard of the ‘NFP moment’ and how that time span promises some trading potential.
Maybe you’ve never looked into NFP moments before, and then ignored them.
You missed a big opportunity.
This is the monthly moment that market participants have been waiting for, from traders, analysts, investors, to speculators.
Missing a moment of NFP means squandering potential profits routinely in plain sight.
Therefore, read until the end of this article to find out how to maximize NFP moments to increase your income.
Definition of NFP
At the beginning of every month, the United States Bureau of Employment Statistics releases a report on economic indicators that displays employment data in the United States, excluding agricultural, household and non-profit sector workers. Typically, the Non-Farm Payrolls (NFP) report is published on the first Friday of the month.
The NFP report contributes up to 80% of the US Gross Domestic Product (GDP), so it is often used as a reference by the US central bank, the Fed, to determine the direction of monetary policy.
Data on average hourly earnings and the unemployment rate are also released at the same time.
NFP is important because, from this moment, we can analyze the price movements of a number of instruments such as currencies (especially USD), stocks, indices, and gold.
- High actual numbers are generally good for the US economy, as job gains mean sound and strong economic growth. Consumers who have money and jobs tend to spend more. The number of jobs that increase by at least 100 thousand jobs per month is considered a positive number by Forex traders and investors, so data showing numbers above 100 thousand often trigger an increase in the USD.
- Correct prediction of data can cause various reactions in the market. The prediction accuracy of the NFP report data will make Forex traders turn to other data for additional information. The data in question includes the unemployment rate and manufacturing reports. For example, if the unemployment rate decreases, Forex traders will agree to view the USD position as strong and positive. Conversely, if the unemployment rate increases, manufacturing jobs also weaken, investors will sell USD to switch to other currencies.
- A low actual figure equates to weakening economic conditions. We are talking about the largest economy in the world. If the NFP report shows a drop below 100,000 jobs (or for example does not reach the forecast), it is a sign that US economic growth is slowing. Forex traders will also look for currencies that yield higher against the USD.
Effect of NFP on USD
Positive NFP data will be good for the USD. If the actual figures released are better than expected and the figures in the previous month, then the wind sign is positive for the USD.
On the other hand, the release of the actual figure below the forecast will have a negative impact on the USD.
In addition, also observe the supporting indicators of NFP, namely the Unemployment Rate and Average Hourly Earnings.
- If the actual figures of the three indicators are better than predicted, the USD will rise.
- If the actual figures of the three indicators are worse than predicted, the USD will fall.
- If the actual NFP figure is better but the earnings report is worse than expected, then the USD will jump briefly, but will fall in the second price wave.
Effect of NFP on Gold
Quoted from Sunshine Profits, there is no clear long-term relationship between the price of gold and the increase in the number of jobs. However, usually good news from employment data (better than expected) is a positive moment for the USD and negative for gold and other precious metals, such as silver.
On the other hand, weak employment conditions have a positive impact on gold prices.
However, the relationship between NFPs and gold prices is much more complicated. The closest example is the Covid-19 pandemic, where the low NFP figures for months did not affect the significant rise in gold prices.
Learn more about the precious metal commodity market, how to use gold as a profitable investment instrument.
Successfully Trading by Reading NFP
NFP is a fundamental indicator that requires understanding. Any new information takes time to become a trend. When the trend has started, that’s where we can act.
The period of greatest volatility is the first 30 minutes after the publication of the data. The effects can last about two hours.
Various reactions can occur at this moment, so we can find conditions that change. Therefore we must be careful in reading trends and always try to trade by involving the market atmosphere.
To ensure the safety of your funds, it is best not to open orders right before release. If you have previously opened an order, as a way to minimize risk we recommend closing it a few minutes before the NFP data is publicly announced.
A good and successful trader is a trader who is smart and wise in taking advantage of the situation.
We may not have to open orders, but it would be good to be prepared for the NFP moment.
Who knew there was an exciting and highly profitable opportunity from the dynamics of various factors and reactions?
By being ready in various conditions, you are already taking sides so that luck is approaching you.
You may also like: 10 Common Trading Mistakes
Image source: Shutterstock.com