The Non-Farm Payroll report basically tells us the change in the number of people employed during the previous month, excluding the farming industry and workers in a handful of other classifications.
Before we can see how the NFP report can affect the cryptocurrency market, we first need to understand why and how it affects the global market, as that is affected in the first instance.
WHY: Because jobs are the backbone of any economy and if more jobs are being created, the economy is strong and healthy. HOW: When jobs are created, that helps put pressure on employers to increase wages, which leads to a growth in spending.
As a result, the NFP report is watched closely and we often see fast moves happening in the forex markets almost immediately, as there is a direct relationship between the level of job creation and interest rates. If jobs and the economy are strong, interest rates will likely rise and so will the dollar.
Next, over in the stock markets, the NFP report has an effect on individual stocks/companies. For example, a decline in employment figures could have a hit on businesses that sell consumer discretionary items. These are not essential but ‘luxury’ items like appliances, electronics, high-end apparel, jewelry, entertainment, holidays, and automobiles. If large numbers of people are becoming unemployed, then they are less likely to spend their income on these ‘luxuries’.
This brings us finally to commodities. After the release of the NFP report, we will typically see the likes of gold, oil, and gas performing strongly whenever figures from the payroll report are worse than expected. This is because these are seen as a ‘safe haven’ investment compared to stocks for example, during times of market downturn.
Cryptocurrencies are also considered a commodity/safe haven and although traders do not usually trade the NFP like the forex traders, the NFP does have an eventual impact on the value of Bitcoin! Historically, when the U.S. dollar weakens, Bitcoin generally gains, thus leading to the NFP report ultimately being important to Bitcoin investors.