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The Importance Of Unemployment Rate In Fundamental Analysis Of Financial Trading

December 26th, 2010 Leave a comment Go to comments

The employment rate is a widely used macro-economic indicator in Forex trading in Singapore that is applied in the Fundamental analysis of the market and can be displayed in the economical calendar of any Singapore Forex broker. As well as many others world economical and political factors, the state of the labor market has a huge impact on the national currency of any country. The big attention to employment must be given in the countries that are in the transitional phases of the economy, in particular, the transition from recession to recovery.

Forex traders must watch the info of employment of those countries whose national currencies are the most popular in the Forex market. Most attention is paid to employment in the United States because the dollar continues to be the key currency in Forex trading and the news of employment in USA usually have a significant influence on currencies? rates related to the dollar.

The situation of the labor market in the United States is characterized by two parameters:

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

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

These factors cover a number of jobs and the employed population in the USA. They are extremely important to accurately find out the growth of unemployment. In addition, the parameter Nonfarm payrolls very important indicator in Forex Singapore, which shows the dynamics of employment in USA. Its increase shows the employment growth and leads to an raise of the USD price.

The unemployment rate is at the heart of labor market indicators. It is calculated out of the balance of unemployed to the amount of all employed people. As a result, the unemployment rate also affects the rate of national currency. A fall in unemployment leads to an increase in foreign currency and vice versa. In addition, the unemployment rate is related to the growth of GDP (Okun law), which is also one of the most important macroeconomic aspects. The raise in the unemployment rate by 1% reduces GDP?s growth by 2%. Usually the calculation 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 change of the workweek. If the working week is shortened, then the country has an economic crisis.

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

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