We sell on news from the labor market

In recent key news, set the major exchange rate movements, are the statistics from the U.S. labor market. For example, the March and April reports to the labor market (Nonfarm Payrolls) shows that this is one of the most important economic indicators, which are the first Friday each month, make trades in the FOREX market the most meaningful and less risky.

The indicator, which moves

The most important economic indicator, which determines the direction of trades in the first Friday of each month, is the number of employees, measured by payroll, which includes not only farm workers.

Nonfarm Payrolls reflect U.S. labor market statistics, with emphasis on changing employment levels. The growth of this figure shows the improvement in the labor market and lead to an increase in the dollar. Practice has shown that increasing the number of workers in the United States by 200 thousand per month leads to an increase in GDP at 3.0% (e-capital.ru). The impact of this indicator felt by all the major segments of the global financial market [1]. But the most sensitive are capital markets and stock markets. Recall, for example, jumped as quotes U.S. Treasury Bond March 5, 2004, in response to data on the February employment report. United States Department of Labor reported then that the February unemployment rate in the country did not change, remaining equal to 5.6%, and in the American economy has created 21 thousand new jobs.

The second figure was shocking. According to the poll Reuters, on average, economists predicted that the number of jobs increased in February to 125 thousand a very low figure encouraged the Treasury bond market participants, giving them reason to believe that the Fed still does not move quickly to raise interest rates. Since the publication of reports on employment cost of a 10-year Treasury bond rose 1 3 / 32, and their yield - the main benchmark for U.S. credit markets - fell to 3.89% versus 4.02% the previous day.

Yield of 2-year Treasury bonds, the most sensitive to the magnitude of the rate the Fed most liquid U.S. government securities, fell to 1.57% versus 1.71% the previous day. This behavior bond market had a short-term support for the dollar, slowing its decline against major world currencies (Fig. 1). From the figure shows that the index of the dollar after the publication of the February employment data has lost about 160 pips, but by the end of U.S. session had already played almost half its losses. The graph marked a long shadow over the bottom constructed of black candles, and the RSI oscillator is not dropped below 55, indicating that the complex is still visible on the potential market of dollar bulls.


Fig. 1. Full-time scan rate index of the dollar.

Such behavior is the FOREX market is largely defined as parts of the report on payroll employment: the number of jobs in manufacturing declined in February to 3 thousand, and it decreased during the 43 months to August 2000 That is in the component market is nothing New not seen. The number of jobs in the service sector, which includes retailers, banks and government agencies has increased by 46 thousand in January after growing by 77 thousand, including in the retail trade employment increased by 13 thousand, while in the public sector was created 21 thousand new.

The average hourly rate of pay, which is an indicator of inflation, rose by 0.2%, or 3 cents, to $ 15.52. Economists predicted no change in rates in February. The average salary for the week increased from $ 523.56 in January to $ 524.58. In part, these figures are projected on to another economic indicator, which is a little earlier - index of the Institute for Supply Management (Institute for Supply Management, ISM).

Constituent ISM employment index

ISM index reflects the integrated view on the industry. It includes data such as orders, production, employment, material and industrial stocks, the prices of exports and imports. The indices for each of these categories is calculated with a value above or below 50. Excess ISM index of 50 is considered as an indicator of growth in industrial activity, and vice versa. Typically, when approaching the value for the ISM 60 investors begin to worry about a possible overheating of the economy, rising inflation and to take appropriate measures (eg, increasing the rate) by the U.S. Treasury. In the fall of 40 to begin talking about a recession. The overall index is based on the survey of 4000 companies, and precedes the fall in the mid-month data on the volume of industrial production (government study involving thousands of survey data 60 companies). The growth of ISM improves currency. It can be considered as an index of business activity. Typically, it is published at 18:00 Moscow time, on the first working day of the month (data for the previous month).

With some lag time after the index in the ISM manufacturing index is the area of business activity in the service sector ISM. It is the results of a survey of service managers to assess changes in the industry. The growth of the value of this index is also a favorable factor for the strengthening of the dollar.

As we remember, in the first decade of March, the growth of employment in the February ISM index has led to a significant improvement in the dollar to the euro and other major currencies. Given this growth, traders expected the February report on employment in the United States show a significant increase in the number of jobs in the American economy, which, in turn, bring the period of the Fed raise rates. But the record is disappointing, that is why, as already mentioned, the dollar relative to major currencies went down.