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Components of the U.S. Employment Report
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The report includes several key data points, the most important of which are:
1. Number of new jobs (Non-Farm Payrolls) the primary indicator that markets are watching.
2. Unemployment Rate reflects the percentage of job seekers from the total workforce.
3. Average Hourly Earnings an important indicator for measuring potential inflation.
4. Labor Force Participation Rate shows the extent of population involvement in the labor market.
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Why is the NFP report so important?
๐น Because it directly impacts the decisions of the U.S. Federal Reserve (FED)
๐น Provides a clear picture of the strength of the U.S. economy
๐น Determines the direction of interest rates
๐น Moves markets violently within minutes of its release
Impact of the NFP report on financial markets;
๐ U.S. Dollar:
โข Strong data โ Dollar rises.
โข Weak data โ Dollar falls.
๐ Gold:
โข Strong jobs โ Negative pressure on gold.
โข Weak jobs โ Gold rises.
โฟ Cryptocurrencies (like Bitcoin):
โข Strong data may pressure crypto.
โข Weak data may support high-risk assets.
๐ Stock Markets:
โข Sometimes rise with strong data.
โข And sometimes fall due to fears of tightening monetary policy.
