The Non-farm payroll (NFP) is a monthly measure of the United States labor market health, released every first Friday of the month by the Bureau of Labor Statistics. It is a key economic indicator for the United States economy and among the most market-moving data points for the US Dollar, US equities, Treasuries, and Gold.
Lately, a report from yahoo finance relayed that half of the United States metropolitan area has recovered jobs lost swiftly to the pandemic drift that almost cut off the engine of the economy. A huge compositional shift was seen across the Dallas city, Salt Lake City, San Phoenix, Nashville city with Austine and the Texas city toping the recovery chart.
This positive release is a build-up on a broad-based 467,000 job gain in last months report, which exceeded all projections from economists. In the report, the Unemployment rate showed an optimal decline of 4 percent and increased average hourly earnings of 0.7% print. This is one of the best shot illustrations of newfound momentum in the labor market as the economy is barreling gradually towards full employment.
X-raying the job market recovery based on sectors, the leisure and the hospitality industry led the growth. Other sectors that posted solid increases include the transportation and warehousing, retail trade, professional and business services, technology and innovation sector, the manufacturing, educational and health sector.
On the contrary, the geopolitical tailwind triggered by the Russian-Ukraine crisis is rattling the market with uncertainty. Russian outright rejection of diplomacy has attracted heavy sanctions from the western. The dialogue is, will this crisis have a concerted impact on the United States job market and on the economy as a whole？
According to a statement by Gina Sanches, an economic analyst in California, “Pandemics are very different from wars in that wars destroy labor and capital, but pandemics only destroy labor”. Evidently, its not quite unusual to see job expansion after the pandemics which we are actually seeing right now.
At the early stage of the crisis, the market experienced rapid volatility with the United States shares and equities indicating a massive decline. Safe-haven assets and currency such as gold (XAUUSD) and the United States dollar respectively keep trading in positive territory as investors run for safety. The impact of this crisis continues to hit hard on the economy, worsening the living standard as the prices of foods are breaking multi-year highs driven by high energy prices and supply chain disruption. This is due to the fact that Russia is one of the top producers of oil, gas and agricultural product, and their supply is short-lived by sanctions.
On the monetary policy frontline, the federal reserve chair Jerome Powell said last month that, “labor conditions were in line with maximum employment. Nationwide jobs openings are near record highs and the country has recovered more than 80% of the jobs lost during the pandemic”. He further projected a tightening policy in the month of March. But from the current geopolitical pressures, a policy rate increase seems unlikely as this could possibly slow the pace of recovery and lead to stagflation in the near term.
Scanning the market performance of the United States dollars (USD), it flourished through the month of February with massive gains and still holding strong in the month of March, defending its safe-haven position. It keeps outperforming the European currencies such as the Euro (EUR), the Pound Sterling (GBP), the Swiss (CHF), and the Asian currencies. Also, gold is not left out on the radar as the race for safe-haven triggers a bull run on the metal (XAUUSD). Currently, the metal (XAUUSD) is trading above $1900 per ounce and could possibly breach the $2,000 per ounce in the long term.
The GDP grew 14.3 percent at an annual rate and its Purchasing Managers Index (PMI) is up 58.6%, indicating an industry expansion, and the consumer price index increased 7.5 percent over the last month.
Nevertheless, Traders should brace themselves up for a period of high volatility as an increase in Non-farm Payroll will strengthen the USD while a decrease will weaken the USD.
In response to the news release, trade the forex market with the following trading instruments on the ACT Brokers platform, as they are mostly affected by the data release; EURUSD, GBPUSD, XAUUSD, USDJPY, USDCAD, USDCHF, AUDUSD, NZDUSD, US30, US100, USOIL, US Oil, Facebook, Amazon, Tesla, etc.
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