Why should I be knowledgeable about the US economy?
The US dollar is an international payment currency. The US has trade relations with many countries around the world, buying (consuming) a huge amount of goods and services. Therefore, if the US economy is growing, then the economies of most countries will also grow and vice versa. A decline in the US economy can lead to a global economic crisis.
The US economy is also one of the most complex economies. Over the course of a month, a huge amount of macroeconomic data is published in the US. It provides the fullest picture of what’s going on in the country, and it also allows you to forecast the future behavior of currencies, stocks, indices, ETFs, and other financial assets.
A couple of the most important indicators are the US unemployment rate and non-farm payrolls.
What are non-farm payrolls?
Non-farm payrolls is the most important indicator, which is published in the US on the first Friday of every month. It shows the number of people employed in the non-agricultural sector of the economy. The higher the non-farm payrolls, the better because it speaks about further economic growth and vice versa. The fewer the number of people employed, the worse the economy feels.
You can choose any currency pair with the US dollar when trading on non-farm payrolls. The best currency pair is EUR/USD.
If the published non-farm payrolls data is higher than the forecast values, then the US dollar will rise (EUR/USD pair will fall) and vice versa. Therefore, movement of the pair is very strong. You can open a trade for 2-3 minutes in the direction of the price movement as soon as the news is released.