Money Loser: Hey Money Maker, I’ve been watching the markets, and every time U.S. Non-Farm Payrolls comes out, the dollar goes wild. What’s the big deal with employment data? 

Money Maker: Ah, welcome to one of the market’s favorite economic indicators. Employment data—especially from major economies like the U.S.—is one of the most influential pieces of macro data for currencies. 

Money Loser: Really? More than inflation or GDP? 

Money Maker: Often, yes. Especially because it gives a timely pulse of economic health. Inflation data comes with a lag. GDP is quarterly and backward-looking. But employment numbers—like NFP in the U.S., or the unemployment rate in the Eurozone—are monthly and very telling. 

Money Loser: So what exactly does employment data tell us? 

Money Maker: In simple terms: it tells us whether the economy is growing or stalling. If companies are hiring, it usually means they expect more business. If they’re firing or freezing hires, they expect tougher times. But in macro trading, it’s not just about job counts. It’s about how employment data affects central bank decisions. 

Money Loser: You mean interest rates again? 

Money Maker: Exactly. Think of it this way: central banks have a dual mandate—especially the U.S. Fed. One: price stability (control inflation). Two: maximum employment. So employment data feeds directly into how they think about interest rates. 

Money Loser: Can you give me a real-world example? 

Money Maker: Sure. Think back to the post-COVID recovery in 2021–2022. The U.S. economy was reopening fast. Inflation started heating up. The Fed began signaling rate hikes—but they said they needed to see a strong labor market recovery first. Every jobs report became a high-stakes moment. 

Money Loser: And traders reacted based on whether the numbers beat or missed expectations? 

Money Maker: Bingo. If NFP smashed expectations, traders saw it as more fuel for Fed tightening. Yields rose. The dollar spiked. If jobs disappointed, traders held back. The curve flattened. The dollar softened. 

Money Loser: So… what should I be watching for in employment data? 

Money Maker: Three things mainly: 

Headline job creation – How many jobs were added (like the NFP number). 

Unemployment rate – The percentage of people actively seeking work. 

Wage growth – This is key for inflation expectations. 

Money Loser: Wait, wage growth? Why does that matter? 

Money Maker: Because wages feed into inflation. If employers are paying more to attract workers, those higher wages circulate back into the economy as spending. That pushes prices up. Central banks hate runaway wage inflation—it’s sticky and hard to reverse. 

Money Loser: Got it. So strong wage growth might be a signal for more rate hikes? 

Money Maker: Exactly. Sometimes even if job growth is just average, a big jump in wages can cause a hawkish shift in expectations. 

Money Loser: Okay, so strong jobs + high wages = stronger currency? 

Money Maker: Usually, yes. But remember: context matters. If inflation is already high, strong employment data adds pressure on central banks to hike, and that strengthens the currency. But if inflation is falling and jobs remain strong, markets may see a soft landing—bullish for both risk assets and the currency. 

Money Loser: What about weak jobs numbers? 

Money Maker: Weak numbers can hit a currency hard—especially if they surprise to the downside. For instance, if markets are expecting 200,000 new jobs and the print is only 50,000—or worse, negative—that can crush rate hike expectations. Yields drop, the currency falls. 

Money Loser: So traders are basically gaming out the central bank reaction? 

Money Maker: That’s right. Employment data is important not in isolation but because of how it shapes monetary policy expectations. Always ask: What will the central bank think?