Unemployment Rate, and How to Use It in Forex
Author: Andrey Goilov
Dear Traders,
As a rule, trading in financial markets is based on tech analysis, expert advisors, and various indicators. Attempts to make a profit on the publication of some important economic news and its analysis stands a bit aside.
One of the strongest indices that can move the market is Non-Farm Payrolls; this index shows the number of workplaces out of the farming sector in the USA. As long as the US dollar is the world’s leading currency, the state of the US economy worries investors and traders, naturally.
Some short time ago, there was a separate category of active traders that were looking forward to the publication of this index because, after the publication, the market could cover hundreds of points in one direction in just a couple of minutes, which was a good opportunity for making a profit. The rest of the week such traders enjoyed themselves, waiting for Friday and NFP.
The unemployment rate: what is it and how does it influence the market?
We may say that employment is the basis of any economy. If workplaces are abundant, more goods get to the market, and the employees get a higher wage. They further spend their revenue on other goods and services, thus increasing demand. However, some say that extremely high or low employment rates might both be harmful to the economy.
If the unemployment rate is high, social tension increases, the share of the middle class shrinks, and so does the real income of the population. If the unemployment rate is too low, employees may lose motivation for working and making high-quality products: there are almost no rivals, seeking the same workplace, hence, no stimulus to become the best. The interests of the employer and the ultimate consumer, who gets a product of mediocre quality, also suffer.
The optimal unemployment rate should be within 3-7% of a country’s working population. Of course, the optimal level might differ from country to country, and the same unemployment rates in two countries are hardly comparable. Anyway, significant fluctuation from the average level may provoke a market movement, which traders will try to use for making a profit.
What does a trader do before the publication of unemployment rate data?
Read more at R Blog - RoboForex
Sincerely,
RoboForex team
Author: Andrey Goilov
Dear Traders,
As a rule, trading in financial markets is based on tech analysis, expert advisors, and various indicators. Attempts to make a profit on the publication of some important economic news and its analysis stands a bit aside.
One of the strongest indices that can move the market is Non-Farm Payrolls; this index shows the number of workplaces out of the farming sector in the USA. As long as the US dollar is the world’s leading currency, the state of the US economy worries investors and traders, naturally.
Some short time ago, there was a separate category of active traders that were looking forward to the publication of this index because, after the publication, the market could cover hundreds of points in one direction in just a couple of minutes, which was a good opportunity for making a profit. The rest of the week such traders enjoyed themselves, waiting for Friday and NFP.
The unemployment rate: what is it and how does it influence the market?
We may say that employment is the basis of any economy. If workplaces are abundant, more goods get to the market, and the employees get a higher wage. They further spend their revenue on other goods and services, thus increasing demand. However, some say that extremely high or low employment rates might both be harmful to the economy.
If the unemployment rate is high, social tension increases, the share of the middle class shrinks, and so does the real income of the population. If the unemployment rate is too low, employees may lose motivation for working and making high-quality products: there are almost no rivals, seeking the same workplace, hence, no stimulus to become the best. The interests of the employer and the ultimate consumer, who gets a product of mediocre quality, also suffer.
The optimal unemployment rate should be within 3-7% of a country’s working population. Of course, the optimal level might differ from country to country, and the same unemployment rates in two countries are hardly comparable. Anyway, significant fluctuation from the average level may provoke a market movement, which traders will try to use for making a profit.
What does a trader do before the publication of unemployment rate data?
Read more at R Blog - RoboForex
Sincerely,
RoboForex team
