is one of the strongest (most affecting the US dollar) reports, which investors perceive at the level of changes in the discount rate and statistics on GDP. One of the strategies for fundamental analysis is to bet on the growth of the American currency against the euro and the British pound in the event of a positive report. But, alas, often this strategy turns out to be erroneous. What is Non-farm, what is its danger and how to trade on it, read the review.
Non-farm – US labor market statistics
Non-Farm Payrolls is a report on changes in the number of people employed in the United States in all areas, including the hotel business and services, except for seasonal agriculture. It is published once a month on the first Friday of the week at 3:30 pm or 4:30 pm Moscow time (depending on the time zone). Statistics are compiled on the basis of data from more than 400 thousand households of different industries. It is believed that an increase in the number of people employed is a positive signal for the US economy, which may be the reason for the increase in the discount rate. And the increase in the discount rate is the appreciation of the national currency. Collects information Bureau of Statistics, publishes – the US Department of Labor.
In the economic calendar, the data is reflected as follows:
- Fact – the actual value of the indicator for the past month. Data appears when the report is published.
- Forecast – the predicted value of the indicator, which is formed by investment banks before the publication of Non-Farm. The forecast is formed on the basis of investor sentiment and such supporting data as a change in average hourly pay, the number of applications for unemployment benefits, an index of business optimism, etc.
- Prev – indicator value for the month preceding the reporting one. Theoretically Fact. for example, July would have to be the same as Prev. in line for the August report. In practice, they do not coincide, since the actual published data are revised and corrected. And the correction can be quite tangible.
There are two options for making money at this event:
- Opening a transaction immediately after the data is published. As practice shows, the predicted value in the price of the dollar has already been laid, because it is important to deviate the fact not from the previous value, but from the forecast. The effect on the course has a deviation of more than 40K people. The highest volatility can be traced in the first 5 minutes, because the transaction must be opened literally in the first seconds. Then the results of statistics can be recouped for another 1-2 hours.
- Placing pending orders in both directions and closing a losing order.
And now about the fly in the ointment. If you look at the dollar exchange rate statistics for the last 6 months, you will notice that the relative rate fluctuations are insignificant, that is, the game is not worth the trouble. Sometimes even non-farm influence is absent, as there are more expected factors (for example, the US trade wars). The volatility of the first minutes can disrupt the foot and catch both pending orders, bringing a loss. There are many reasons for volatility: data revision, anomalies, the game of institutional investors, etc. Ultimately, the risk of losing money turns out to be much greater than the potential earnings. At least, there are much more promising moments for entering the market.
Conclusion. How to make money on non-farm? No The best strategy is 30 minutes before the release of the report to close all transactions in the dollar. And since after the release of statistics it is better to wait a couple of hours and there is no sense to open a position at 17.00, then from 14.30-15.00 Fridays until Monday morning the trader can rest. If you do not agree with this opinion, we invite you to discuss it in the comments!