The Unemployment Rate in Forex Trading

employment rateThe unemployment rate is the most important macro-economic indicators in Forex trading that is used in the Fundamental analysis of the market and can be found in the economical calendar. The situation of the labor market has a considerable influence on the national currency of any country. The particular attention to the employment must be given to the countries that are in the transitional phases of the economy, in particular, the transition from recession to recovery.

Forex traders must watch the parameters of unemployment of those countries which are the key members of the Forex market. Particular attention is paid to employment in the United States because the dollar remains the principal currency in the Forex and the news of employment in USA usually have a significant impact on currencies’ rates related to the dollar.

The change of the unemployed population in the United States is characterized by two parameters:

Nonfarm payrolls – the number of jobs (excluding temporary positions related to agriculture), the rate affects about 340,000 companies in 500 industries;

Household employment – the number of unemployed people among any group of people with different specialties.

These Forex indicators cover a number of jobs and the employed population in the USA. They are extremely important to accurately determine the extent of unemployment. In addition, the figure Nonfarm payrolls extremely powerful indicator in Forex trading, which determines the dynamics of employment in America. Its increase characterizes the employment growth and leads to an increase of the USD price.

The unemployment rate is at the heart of labor market indicators. It is calculated out of the ratio of unemployed to the number of all employed people. Accordingly, the unemployment rate also affects the rate of national currency. Decrease in unemployment leads to an increase in foreign currency and vice versa. In addition, the unemployment rate depends on the growth of GDP (Okun law), which is also one of the most important macroeconomic indicators. The increase in the unemployment rate by 1% reduces GDP’s growth by 2%. Usually the analysis of the unemployment rate are done with the numbers that show the size of the Nonfarm payrolls index.

Statistical data of the unemployment rate in the USA and the indicator Nonfarm payrolls are available from 08:30 am Washington time every first Friday of the month.

The beginning of the recession allows you to watch the duration of the workweek. If the working week is reduced, then the country has an economic crisis.

The average hourly wage helps to define the beginning of inflation. A sharp increase in wages, outstripping productivity also indicates the beginning of inflation in the country.

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