What is NFP?
NFP stands for Non-Farm Payroll and this specific economic event is always released on the first Friday of every month. Rarely, the NFP figure may be postponed to the second Friday if the first Friday is the first of the month or a public holiday. The NFP figure is a report which shows how many individuals are employed within the US but excludes specific industries such as agriculture.
Why is it important to the Dollar?
When individuals wish to invest in stocks, bonds and a currency, they prefer currencies backed by a strong economy with a robust employment sector. In addition, if employment is high, the Federal Reserve is also likely to increase interest rates or keep them high; again, this can support demand for the Dollar.
A higher-than-expected NFP figure is positive for the Dollar.
A lower-than-expected NFP figure is negative for the Dollar.
Why is it important to the US Stocks?
The NFP figure can affect the US Stock Market in 2 ways. A higher-than-expected NFP figure can indicate a resilient economy and higher consumer demand. As a result, companies perform better; earnings are higher, as is investor confidence. This can cause the stock market to rise.
On the other hand, if the Federal Reserve is increasing interest rates, positive employment figures may support a further increase. Interest rates can significantly pressure the stock market.
Why is it important to the Gold?
The price of Gold is largely inversely correlated with the cost of the Dollar. As a result, the NFP figure can influence the price of Gold. If the Dollar increases in value, Gold typically would decline and vice versa.