How Employment Reports Affect Forex Markets

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Employment is an important aspect of an economy’s ability to expand since it is an indicator of future spending trends for consumers. Forex traders will monitor the different employment reports for various countries since stronger consumer spending will increase demand for a particular currency. Therefore, employment reports are key economic indicators for any investor looking to make profit in the currency markets.

U.S. Employment Situation Report

Employment in the U.S., being the largest economy in the world, is a key driver of the global economy and is therefore closely watched by forex traders. The U.S. Employment Situation Report is the largest and most significant economic release based upon the American jobs market. The report includes various important economic data sets: non-farm payrolls, hours worked, national unemployment rate and hourly earnings.

U.S. Jobless Claims Report

Another important employment report for the U.S. is the Jobless Claims Report. This economic report is released once per week and reflects the number of people filing state jobless claims for the first time across the country. Since the sample period is short, the data can be quite volatile compared to data released in the monthly U.S. Employment Situation Report. Therefore, the data is commonly presented as a four-week moving average in order to give traders, economists and investors a clearer picture of the job market in the U.S.

Other Important Employment Reports

On the other hand, along with the U.S., a forex trader should also be paying attention to employment reports from other countries that are relevant to the currency pairs he or she is actively trading. Most of the major employment reports in the U.S. have equivalent releases in other countries. For instance, the U.K.’s Claimant Count Change report provides similar data to the U.S. Jobless Claims Report.

However, it is one thing to have an understanding of the different employment reports affecting forex markets and quite another thing to actually trade off these economic indicators profitably. This is why it is important for forex traders to have a comprehensive view of the markets by taking into consideration other economic data sets. Also, proper risk management is key in not only trading profitably but also keeping from losing all of one’s invested money.

Writer Bio

LeBach PhamLe Bach Pham has been writing professionally after receiving his Bachelor’s of Art in English Literature from the University of California, San Diego in 2002. He now specializes in writing about legal, business and financial topics. Pham also earned a Paralegal Certificate from the University of San Diego and has experience working in the legal field. He also has experience in writing business plans for clients from various fields, including banking, finance, retail, education, beauty and various other sectors.

Sources:

  • http://fxtrade.oanda.com/learn/intro-to-currency-trading/fundamental-analysis/monetary-policy
  • http://www.investopedia.com/ask/answers/06/nonfarmpayrollandforex.asp
  • http://www.investopedia.com/articles/forex/05/tradingonnews.asp
  • http://www.investopedia.com/walkthrough/forex/intermediate/level5/jobless-claims.aspx
  • http://www.investopedia.com/walkthrough/forex/intermediate/level5/labor-report.aspx

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