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On January 30th, analysts stated that gold and silver prices fell due to news that Kevin Warsh would be nominated by Trump as the next Federal Reserve Chairman. An analyst from a Malaysian bank stated in a foreign exchange research and strategy report, "Warsh has long been a critic of extremely loose monetary policy and has served as a Federal Reserve governor; therefore, the market may be pricing in the potential impact of his appointment on the future policy path."On January 30th, Nomura Securities analysts CW Chung and Eon Hwang stated in a report that SK Hynixs first-quarter earnings may be stronger due to a larger-than-expected increase in memory chip prices. The analysts raised their quarterly operating profit forecast for the South Korean chipmaker from 21 trillion won to 29 trillion won. The report stated that DRAM and NAND memory product prices are expected to increase by 56% and 40% quarter-on-quarter, respectively, faster than Nomuras previous forecasts of 23% and 20%. Nomura raised its target price for SK Hynix by 42% to 1.25 million won and maintained its buy rating. SK Hynix shares recently rose 4.5% to 900,000 won.January 30th - According to Zhejiang Provincial Airport Group, during the Spring Festival travel rush, airports across the province are expected to handle 10.61 million passengers, averaging 265,000 passengers per day, representing a year-on-year increase of 5.4%, which is 2.2 percentage points higher than the national average and is expected to set a new historical record.The bid-to-cover ratio for Japans 2-year government bond auction was 3.88, higher than the 3.26 for the previous issuance in December.Market Warnings: Risks in the Gold Market 1. Carson Group: Gold prices have stretched to near-extreme levels, and some moderate profit-taking is not surprising. 2. Spartan Securities: A pullback in gold and silver futures may indicate that prices have reached recent highs, making this reversal significant. 3. Vantage Point: Recent gold price movements have become rapid, emotional, and non-linear, a warning sign that the trend is overextended at a tactical level. 4. Market analyst Jeremy Boulton: Gold is what really needs to be watched closely; its price surges in an extremely volatile manner, significantly increasing the risk of a reversal. The current gold price rally is extremely distorted. Any extreme movement warrants caution. 5. Galaxy Overseas: Gold and other precious metals appear to be in a self-reinforcing feedback loop, with their price movements themselves becoming news drivers of price changes. This could affect investors perception of fiat currency-related risks and lead to a widening of the bond risk premium at the long end of the yield curve. Investment banks remain bullish on gold: 1. Goldman Sachs: The sharp two-way fluctuations in silver prices may persist, while emphasizing that the year-end gold price target of $5400 still faces significant upside risks. 2. RBC Capital Markets: Golds upward momentum is far from peaking, with prices potentially reaching $7100/oz by year-end (previously predicted to reach around $5200 in the fourth quarter). 3. Deutsche Bank: Gold reaching $6000 is achievable given the weakening dollar this year. Based on the outperformance of the past two years, gold prices could even reach $6900. 4. OCBC Bank: Raised its year-end 2026 gold price target from $4800 to $5600. The rise in gold prices reflects recent developments and their continued exceeding expectations, rather than a reassessment of the underlying logic. 5. Bank of America: While history doesnt always predict the future, the average gold price increase in the past four bull markets was approximately 300% over 43 months, suggesting gold will reach $6,000 per ounce by the spring of 2026. 6. UBS: Maintains a bullish stance on gold and has raised its price forecasts for March, June, and September of this year to $6,200 (previously $5,000), expecting a modest pullback to $5,900 by the end of 2026. 7. Bank of Montreal: Assuming central banks purchase a total of 8 million ounces of gold per quarter, while ETFs see inflows of approximately 4-5 million ounces per quarter, and with continued weakening of real yields and the US dollar, this will push gold to $6,350 in Q4 of this year and $8,650 in Q4 of next year.

What impact does NFP have on the forex market?

LEO

Oct 25, 2021 13:27

Nonfarm payroll employment is a compiled name for goods, construction and manufacturing companies in the US. It does not include farm workers, private household employees, or non-profit organization employees.

It is an influential statistic and economic indicator released monthly by the United States Department of Labor as part of a comprehensive report on the state of the labor market.

The Bureau of Labor Statistics releases data on the first Friday of the month, at 8:30 a.m. Eastern Time. 

This data is analyzed closely because of its importance in identifying the rate of economic growth and inflation.

Nonfarm payroll is included in the monthly Employment Situation or informally the jobs report and affects the US dollar, the Foreign exchange market, the bond market, and the stock market.

The markets react very quickly and most of the time in a very volatile fashion around the time the NFP data is released. The short-term market moves indicate that there is a very strong correlation between the NFP data and the strength of the US dollar. Historical price movement data shows a small negative correlation between the NFP data and the US dollar Index.

The figure released is the change in nonfarm payrolls (NFP), compared to the previous month, and is usually between +10,000 and +250,000 during non-recessional times. The NFP number is meant to represent the number of jobs added or lost in the economy over the last month, not including jobs relating to the farming industry.

As with other indicators, the difference between the actual non-farm data and expected figures will determine the overall impact on the market. If the non-farm payroll is expanding, this is a good indication that the economy is growing, and vice versa. However, if increases in non-farm payroll occur at a fast rate, this may lead to an increase in inflation. In forex, the level of actual non-farm payroll compared to payroll estimates is taken very seriously. If the actual data comes in lower than economists' estimates, forex traders will usually sell U.S. dollars in anticipation of a weakening currency. The opposite is true when the data is higher than economists' expectations.

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