Non farm payroll

CHICAGO, March 11 /PRNewswire-FirstCall/ -- CME Group, the world's largest and most diverse derivatives exchange, announced today that futures and options on futures on the U.S. Bureau of Labor Statistics' (BLS) Non farm Payroll data are scheduled to launch Sunday, April 27, 2008, in anticipation of the Friday, May 2, release of the April economic data.

The contracts, based on the monthly BLS Establishment Survey of 375,000 businesses that is usually released on the first Friday of each month, will allow customers to directly manage their exposure to the government labor number or to offset positions in financial markets. The Nonfarm Payroll report is typically the first major economic release of each month and speaks to the condition of employment from the prior month. It is closely followed as a way to gauge how the Federal Open Markets Committee perceives economic growth.

"There is a strong correlation between the Nonfarm Payroll report and CME Group financial futures contracts as well as other financial instruments," said Rick Redding, CME Group Managing Director of Products and Services. "Listed futures and options on futures on the Nonfarm Payroll are a transparent, straightforward and accessible way for our customers to offset unexpected financial market moves that often occur when this number comes out."

The Nonfarm Payroll contracts will be listed exclusively on the CME Globex(R) electronic trading platform, Sunday through Thursday from 5:00 p.m. to 4:00 p.m. Chicago time. One contract will be listed at a time and each contract will be listed on the Monday after the previous month's release. Trading in the expiring contract concludes at 7:25 a.m. on the day that the BLS releases its Nonfarm Payroll report. Each contract is valued at $25 times the change in the Nonfarm Payroll number from the previous month. For more derivatives exchange. Formed by the 2007 merger of the Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (CBOT), CME Group serves the risk management needs of customers around the globe. As an international marketplace, CME Group brings buyers and sellers together on the CME Globex electronic trading platform and on its trading floors. CME Group offers the widest range of benchmark products available across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, agricultural commodities, and alternative investment products such as weather and real estate. CME Group is traded on the New York Stock Exchange and NASDAQ under the symbol "CME."

The Globe logo, CME, Chicago Mercantile Exchange, CME Group, Globex and E-mini, are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago. These trademarks are used herein under license. All other trademarks are the property of their respective owners. Further information about CME Group and

Non-farm Payroll Report

Nonfarm payroll employment rose a moderate 92,000 in October while wage inflation came in at a strong 0.4%. The unemployment rate, reflecting a tight labor market, fell a 4.4% from a 4.6% in September. While a moderate payroll jobs increase is needed to support a soft landing, the markets will be paying attention to signs of whether the labor market is remaining tight or showing any signs of softening. Even a 115k gain is consistent with the weakening economy. Fed Chairman Bernancke and other Fed officials have emphasized that tight labor markets are a concern. Also, with recent weakness in manufacturing as seen in durables orders and various private surveys, markets will be paying attention to factory jobs and factory hours worked. In October, manufacturing jobs fell by 39,000 while the aggregate index for hours worked in manufacturing was flat. Manufacturing is expected to show a fifth consecutive decline as demand dries up.

The Labor Department reported, in the week ending November 25, the advance figures for seasonally adjusted initial claims was 357,000, a increase of 34,000 from the previous week's revised figure of 323,000. The 4-week moving average was 325,000, an increase of 7,250 from the previous week's revised average of 317,750.

Of all the world monthly economic reports that can move the currency market, this is it! The monthly US Non Farm Payroll report. This report is the most highly anticipated report each month that can have the most dramatic impact on the markets.

The employment data gives the most comprehensive report on how many people are looking for jobs, how many have them, what they are getting paid and how many hours they are working. These numbers are the best way to gauge the current state as well as the future direction of the US economy.

As with all major economic releases there could be significant price volatility with this announcement. Currency spreads will typically widen just before the release and will remain wide for a few minutes after. If the announcement is a shock to the consensus estimate, the price of the currency pair could gap significantly. For example, the price on the EURUSD trading at 1.2820 - 1.2822 just before release could gap up 60 pips to 1.2880 - 1.2882, without any available prices available between the price of 1.2820 and 1.2882. A Buy Stop placed before the announcement at 1.2830 would turn into a Market Order and would be filled at the prevailing price 1.2882. The same would be true with a Sell Stop.

Approximately four years ago we saw a gap of approximately 200 pips on the GBPUSD on a Non-Farm Payroll announcement. While this is an extreme example, this is what is possible with trading during economic announcements. Basically, plan on the spreads widening and if you are trading with a Buy or a Sell Stop entry order, do not anticipate being filled at your entry price. You will be filled at the prevailing market price after the release, and this market price could be significantly different from your desired price of your entry order.

Non-farm Payroll Employment

Option Trading profits can be greatly increased by accurate predictions of market direction. Equity market direction is influenced by economic indicators, which influence the strength and direction of the economy. That makes them important in any comprehensive assessment of market direction, so it is helpful to understand them and watch them. One of the most popular and important economic indicators is Non-Farm Payroll Employment.

An estimate of the number of payroll jobs at all non-farm business establishments and government agencies is published as the Non-Farm Payroll Employment, on a monthly basis. This report also includes data on average hourly and weekly earnings as well as the average number of work week hours. Increases in this number indicate an expanding economy and decreases indicate a contracting economy.

When you are making decisions on your option positions, it is important to do appropriate analyses on those positions in addition to looking at economic indicators and doing your fundamental analysis on underlying equities and market direction. Determine fair value for your options to make sure you don't pay too much for them. Don't let your profits erode; make sure you get the right start. It is also good to assess the actual probabilities of reaching your goals. Don't rely on just a feeling. A good option calculator like Option-Aid can do all of these calculations for you and make it easy.

Pounds To Dollars : Non Farm Payroll Explained

The highlight of the NFP is the unemployment report, which is the percentage of the civilian workforce that is unemployed. By definition it is anyone who is 16 years or older who is classified as employed or unemployed. The data is constructed from two different sources. The first is from a 'household' survey, where date is collected 'establishment' survey, in which companies are polled directly about recent changes in staff. Together the two surveys provide a balanced view of the labour market and more broadly the economic health of the country. The only groups excluded from the establishment survey are farm workers, the self employed and domestic help, hence the indicator's name - Non Farm Payroll.

The report itself contains a vast amount of data, but the figures which attract the attention are whether jobs have increased or decreased, and by how many. The markets react to this data immediately, but within the figures are many nuggets of information covering average hourly earnings, overtime, hours worked and sector by sector comparison. So let's look at one or two of these as follows: ( there are plenty of others so if you would like further details please just drop me a line)

Hours Worked - differences in hours worked can be another advance indicator of future economic activity. At a very simple level, assume that the average number of hours worked increases for 3-4 months in a row - then clearly something is happening and could be a strong sign that the economy is growing, and that more jobs will be created in the medium term.

Overtime Hours - another excellent indicator of increasing output and therefore a growing economy. During difficult economic times, companies generally make their labour force work longer hours, rather than employ more staff. Since overtime is also costly, eventually the overtime hours are replaced by full time labour. So if overtime hours are steadily increasing over 3-4 months, then this suggest that the economy is growing and that new jobs will also be created. A steady level over 4.5 hours is a sure sign of new jobs.

Duration of Unemployment - this is a good barometer of economic activity as it shows how long the unemployed have been without jobs. In simple terms a falling trend suggests that the economy is picking up, and alternatively a rising trend suggests the opposite.

Overall, employment data can strongly influence the US dollars value. A strong jobs report could drive interest rates higher, making the dollar more attractive to overseas investors particularly if they look to invest in US Treasury Securities. Alternatively if the report is weak then it can put pressure on US stocks and increases the chances of the FED reducing rates in the future making the dollar less appealing.