What Does the Nonfarm Payroll Report Mean for Your Trading?

LONDON, September 1, 2011 /PRNewswire/ --

Many traders consistently monitor economic indicators in order to recognise and capitalise on trends in economic growth. One of the most closely-watched indicators is the U.S. employment report, which is released on the first Friday of every month by the United States Department of Labor and includes the nonfarm payroll report.

Nonfarm Payroll Report

The nonfarm payroll report compiles the total number of paid U.S. workers, excluding employees of government, private households, non-profit organisations and farms. The release of the figures can give significant insight into the state of the economy - an increase tends to indicate businesses are growing and people have money to spend, fuelling economic growth. A decrease suggests the opposite.

August Nonfarm Payrolls

Looking ahead to Friday's report, Joshua Raymond, Chief Market Strategist of financial trading firm City Index (http://www.cityindex.co.uk/),  states: "If the nonfarm payrolls miss general consensus and the US unemployment rate continues to rise, this could apply even more pressure on the Fed to start QE3. What's more the market is optimistic that, despite Ben Bernanke's refusal to commit to QE at Jackson Hole, the extension of the FOMC meeting in September from one to two days is a sign that this could be the moment when QE is much more readily considered, with the extra time used to re-align the fragmentation of the FOMC after three members dissented in the last meeting."

"That said, a stronger reading could dash hopes for QE whilst also helping to show signs of a strengthening US labour market, which considering that consumer spending is responsible for roughly 70% of US activity, could calm fears of a sharp slowdown in US growth. Either way, it is shaping up to be a very interesting and potentially volatile trading session on Friday."

Three of the markets historically affected by nonfarm payrolls data are Wall Street, Euro/Dollar and Sterling/Dollar. City Index offers one point spreads on both Wall Street and Euro/Dollar, as well as a two point spread on Sterling/Dollar. Find out more about the range of narrow spreads available at City Index by visiting http://www.cityindex.co.uk/1point-spreads/

Spread betting and CFD trading are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.

About City Index:

Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.

As a group, we transact in excess of 1.5 million trades every month for individuals in over 50 countries worldwide. We provide access to a wide range of instruments including margined foreign exchange, contracts for difference (CFDs) and, in the UK, spread betting.

We constantly look to widen the range of assets we offer, improve the performance of our platforms and expand the range of services we provide. The result is that our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer service and support. Visit http://www.cityindex.co.uk/ for more information.

SOURCE City Index

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