Daily trading small tips

Nonfarm payroll (economists and regulators call it employment data while investors and traders name it NFP) is one of the most important data for financial markets. NFP is a measure of the number of workers in the US, excluding farming, private households, non-profit and self-employment.

It can be used as a gauge whereby increases in employment means businesses are hiring and newly employed have money to spend on goods and services, which further fuels growth. However, if the NFP is strong, Fed may raise Fed Fund Rates as a measure to tame inflation.

At this juncture, Fed is in rate cut cycle; nonetheless, if the inflation and job data are stronger than expected, then Chairman Powell may not cut rate aggressively. Basically, this is called hawkish cut (where he cut rate, but in a hawkish language). It explains why tech and Magnificent 7 retraced gain after FOMC cut in December.

Normally, NFP is released every first Friday of the month. Due to the new year holiday, the data will be released next Friday.