Saxo Group
Summary: As one of the key economic health indicators for the United States, the nonfarm payroll (NFP) is intended to represent the total number of paid workers in the U.S. excluding farm employees, government employees, private household employees and employees of nonprofit organisations.
How does it impact the FX market?
As economic health attracts foreign capital, forex pairs involving USD typically move significantly in the minutes and hours after the release of the monthly NFP figure.
How to interpret it?
Like other economic data, there are three ways to interpret the nonfarm payroll number.
Impact on the equity market
An above expectations NFP figure reflects economic health, which is positive for equities. However, a significantly higher number than expected increases the likeliness of higher interest rates, which reduces expectations of earnings growth and puts pressure on stock prices.
Keep track of the nonfarm payrolls with the calendar in SaxoTraderGO
Under the calendar tab in SaxoTraderGO, you can find the previous, estimated and actual figures of the U.S. nonfarm payroll as well as other major economic data.
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Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.