In April, Nonfarm Payrolls (NFP) in the US rose by 428,000, surpassing the forecasted figures.
How did markets react?
Why does NFP affect the markets?
NFP tracks the total number of jobs that were added in the USA by many entities across different private and government entities, excluding some types of workers. As might be apparent from its name, NFP excludes farmworkers in the agricultural industry mainly due to the seasonal nature of these jobs. The goal of the NFP is to provide an insight into the employment situation, which is better gauged by only including permanent job hires. 🇺🇸
Unlike the unemployment rate, a higher NFP reading is better. For example, if the NFP reading is 100,000 – this means that 100,000 jobs were added to the US economy. Of course, investors shouldn’t just look at the nominal figure of NFP, but rather how it compares to analyst forecasts. 🧐
So, usually, assets like Gold and Euro that trade inversely to the U.S. dollar, tend to decline if NFP is better than expected, and vice versa. However, as in this case, you can see the markets initially surged significantly due to the market expectations which need to be taken into account, too.
Stay tuned for May's NFP release!📊
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