Forex · Intermediate · 4 min

Economic data: NFP, CPI and co.

You can name the US data releases that move currencies most, find their release times, and explain why the surprise matters more than the number.

8:30 a.m. Eastern

At 8:30 in the morning in Washington, the US government publishes a single figure on its website. Within seconds, the euro, the yen and the pound all jump against the dollar.

Economic data is one of the main drivers of currency prices, because it changes what central banks are likely to do next. This lesson introduces the releases traders watch most, and how to read them.

Jobs and inflation

As the last lessons showed, currencies react to expected interest rates. Central banks set rates based on the economy, above all on jobs and inflation. Data about those two therefore moves currencies.

The two most watched US releases come from the Bureau of Labor Statistics:

The Employment Situation report, or jobs report, includes nonfarm payrolls: the change in the number of jobs outside agriculture. The BLS publishes it at 8:30 a.m. Eastern, usually on a Friday early in the month. Holidays and other events can move the date.
The consumer price index, or CPI, measures changes in the prices of a basket of goods and services. The consumer price index is also released at 8:30 a.m. Eastern, on dates the BLS publishes in advance.

Other countries publish their own data, such as euro area inflation or UK jobs figures, and each moves its own currency.

How to read a release:

Compare with forecasts. Economists publish expectations beforehand. The surprise moves prices, as in the lesson on news.
Read the details. Revisions to earlier months, wages or core inflation can change the picture.
Expect volatility. In the first seconds, spreads widen and prices can jump in both directions.

Headline vs. details

Before a fictional US jobs report, economists expect 150,000 new jobs.

At 8:30 a.m., the report shows 300,000. The dollar jumps 0.8% against the euro.
A minute later, traders see that the two previous months were revised down by 120,000 jobs, and wage growth slowed.
Within an hour, the dollar gives back half of its gain.

The headline surprised one way, the details the other. Traders who bought the first spike paid the widest spreads of the day for a move that faded.

Common mistakes

Trading the headline only. Revisions and details matter.
Ignoring the forecast. A good number can disappoint if more was expected.
Using market orders at the release. Spreads and slippage are largest then.
Not checking release dates. They are published long in advance.

The takeaway

Jobs and inflation data shape rate expectations, so they move currencies. US releases come at 8:30 a.m. Eastern. Prices react to the gap to forecasts.

Check yourself

Quick quiz

4 questions. Instant feedback, nothing is saved.

1Tap the release that measures inflation.

Tap the chart.

The consumer price index tracks the prices of a basket of goods and services. It strongly shapes rate expectations.
2When does the US Bureau of Labor Statistics release the Employment Situation report?

The BLS schedule shows 8:30 a.m. Eastern. Holidays and other events can move the date.
3Analysts expect 150,000 new jobs. The report shows 300,000. What tends to happen to the dollar?

A strong surprise can push rate expectations up, which tends to support the currency.
4Why can a currency reverse minutes after a data release?

Revisions to past months or weak details can change the first reaction, as in the lesson on news.

of 4 correct.