ATFX Commentary: The Non-farm Employment Report (NFP) is released on Friday night at 8:30 pm (daylight saving time), based on the U.S. Department of Labor’s monthly “Current Population Survey” (CPS). The report contains very rich labor market data, and the following five things have attracted market attention:
1, changes in the total number of non-agricultural employment
2, unemployment rate
3, hourly wage growth rate
4, hourly wage growth rate
5, labor participation rate
ATFX chart
0 Due to the last three data, the monthly change is not large, so it is also of low importance. The first change in the total number of non-agricultural employment is the biggest highlight of NFP and the core factor causing the fluctuations in the foreign exchange gold market. The unemployment rate data is also very important, but unless the data breaks through the 5% full employment level, it will not have a significant impact on the market. During the COVID-19 epidemic, the number of non-farm employment in the United States decreased by 20.5 million in April, and the unemployment rate soared to 14.7%, indicating that the US labor market was hit by a huge impact and constituted a negative suppression on the US dollar index .
NFP has a relatively short impact on the foreign exchange gold market. The most direct impact is ten minutes after the data is released (8:30~8:40) K-line trend, and many traders will be negative for the "Double Flying Swallow" strategy to capture the trading opportunity. However, from the perspective of data statistics, the non-agricultural and US indexes are not 100% positive correlation. That is to say, even if the non-agricultural data is favorable, the US dollar index may not necessarily fall, and gold may not necessarily rise; even if the non-agricultural data is negative, the US dollar index may not necessarily rise, and gold may not necessarily fall. More traders regard the release of non-farm data as a "risk event". They close all positions before the data is released, and wait for the data to be released before conducting strategic trading. Due to the existence of such traders, the mechanism for the positive reaction between the non-agricultural and US dollar indexes has been weakened.
Any data released requires traders to analyze whether the data is a bullish market or a bad market, and NFP is no exception. The latest published values of non-agricultural employment population data often need to be compared with two values: one is the previous value and the other is the expected value. The previous value represents the changes in the non-farm employment data in the previous month, and the expected value represents the market institutions' predictions on the changes in the number of non-farm employment this month. The simplest case is: publish the value; the previous value and the value is published; the expected value, which represents that the non-agricultural employment report is absolutely favorable to the US dollar index and is negative for gold; the same is, the published value; the previous value and the value is announced; the expected value, which represents that the non-agricultural employment report is absolutely bad for the US dollar index and is positive for gold. What is more difficult to judge is the third situation: the published value is between the previous value and the expected value.
Figure 1, Summary of the last ten non-agricultural employment population data - ATFX
In the figure, green represents an absolute negative US dollar index, and red represents an absolute positive US dollar index. Only on November 1, 2019 and May 8, 2020, there were phenomena between expected values and previous values, and specific issues were needed to be analyzed in detail. Let’s first look at November 1. The previous value increased by 180,000, and the expected increase was 85,000. The expectation was hugely different from the previous value, which means that the market was extremely bearish on the US labor market conditions that month. However, the latest data is 128,000, which is lower than the previous value of 180,000, but is far from the expected 85,000, indicating that the US labor market has a certain degree of resilience and its risk resistance is not bad, so it gives a conclusion of "benefits". Let’s look at the data on May 8. The announced value is also between the previous value -701,000 and the expected value -22 million. However, since the announced value is -20.5 million, it is very close to the expected value and the absolute value is too large (the impact of the epidemic), so the data is classified as a "bad".
traces back to the golden daily line level trend. We found the daily K-line corresponding to the above ten non-agricultural employment data and found that 5 of them showed the cross star pattern of long upper and lower shadow line . The cross star represents a fierce competition between bulls and bears in the market. There is no clear direction in the future, and short-term trading cannot make profits, and it will only "lose on both ends". Therefore, traders need to have a clear understanding of the non-agricultural market, and their impact on the foreign exchange gold market has gradually become weaker.
ATFX Disclaimer:
1. The above analysis is provided by Dean, senior ATFX analyst.
2. The above analysis only represents the analyst's views. The foreign exchange market is risky and investment should be cautious.
3, ATFX will not be responsible for any profit or loss that may arise from direct or indirect use or reliance on this information.
4. Some content comes from the public information of the network
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