What is NFP?

Non-Farm Payroll (NFP) - economical event, measuring the change in the number
of employed people by the US economy during the previous month, excluding the
farming industry. Happening every first Friday of the month 15:30 GMT+2 South
African Time 🇿🇦

Why is considered as the biggest event on Forex market?

The non-farm payroll (NFP) figure is a key economic indicator for the United
States economy.

It leads to a heavy market volatility on USD Pairs and GOLD, offering traders the
opportunity to make huge returns in short period of time!!

NFP is one of, if not the most, anticipated indicators of economic growth. In a
nutshell, the non-farm payroll (NFP) figure is an economic indicator used in the
United States economy. What it is and does will be explained in detail in this NFP
trading – a beginners guide to trading it.

The release of the NFP generally occurs on the first Friday morning of every
month and it shares the number of jobs created in the United States the previous
month.

The NFP report gives an indication of the level of economic activity and economic
health of the American economy.

The NFP will show employment data in American outside of the following sectors:
Agriculture (migrant workers for example), public service, and volunteering jobs.

Along with the NFP they also look at the data on unemployment, which sectors
are growing or diminishing in terms of employees, the average number of hours
worked, the average hourly earnings, and a few other key employment statistics.
Given that many economies across the globe do business with the United States,
and many countries rely on the American consumer for a great deal of their
profits, the NFP report also has an influence on many world markets beside the
U.S market , and generates a lot of speculation among the world’s traders.

Why is the NFP report so important?

The United States is a consumer-driven economy, and employment growth and
wage gains have a direct impact on consumer spend and growth in the country.

Obviously, the more people are working and the more they are earning and more
stable their jobs are then the more they will spend on not only necessities but on
services and luxuries as well, which fuels the economy.

The non-farm payroll report causes, as stated earlier, the largest movements of
rates of any news announcement in the Forex market.

Therefore, all of the Forex world anticipate the NFP number and the directional
movement it will cause and this can often cause large swings in the currency rate.

NFP Report flaws

It may surprise you to know, however, that the NFP, is very flawed despite being
considered one of the most important reports in the American Economy and one
of the most closely watched economic indicators in the Forex market.

To begin with, the NFP is the difference between two estimated figures. The
government estimates the number of job losses and the number of job gains and
subtracts them and the difference gives the NFP.

It is far from an exact figure and gets revised not once but twice before it is
finalized which means the first figure you hear is often far from accurate, and
there is also a large margin of error.
Which assets are affected by the NFP?

The Dollar. The dollar is the most obvious market affected as already discussed,
because the NFD has a bearing on interest rates it can move the USD.

Forex pairs where you may see price moves when the NFP is released include the
Dollar Index (DXY), USD/EUR, GBP/USD, USD/JPY, USD/CHF, as well as other USD
pairs including crypto currency pairs such as BTC/USD.

S&P 500/Indices. The NFP can also influence the price of stocks and you will see
this reflected in the indices because they reflect changes in the stock market as a
whole.

Gold. The NFP influences gold because of its relation to the USD.

Oil/WTI/Brent. The outlook for oil/energy/gas is affected by the NFP as well but
only when combined with oil conditions, for example when oil supplies are low or
demand is rising a strong NFP can help generate or fuel a rally.

Stocks: The NFP report can impact stock markets, as it provides insights into the
health of the US economy. A strong NFP report, indicating positive employment
growth, can lead to an increase in stock prices, while a weaker report can lead to
a decline.

Commodities: Commodities such as oil and gold can also be affected by the NFP
report, as it can provide insights into the overall strength of the US economy and
global demand for these assets.

Bonds: The NFP report can also impact bond markets, as it can influence the
decisions of the Federal Reserve regarding interest rates. A strong NFP report may
lead to an Increase in interest rates, leading to a decline in bond prices
What do you need to look for in an NFP Report?

When looking at an NFP report, there are 5 key factors that you should pay
attention to;
1. Non-Farm Payrolls Number: This is the headline number that shows the total
number
of jobs added or lost in the US economy during the previous month. This is the
most
closely watched metric in the report.

2. Unemployment Rate: This shows the percentage of the unemployed labor

force and
actively seeking work. A higher unemployment rate can indicate weakness in the
economy, while a lower rate can suggest strength.

3. Average Hourly Earnings: This is the average hourly wage for non-farm
workers.
Rising wages can suggest inflationary pressures, leading to higher interest rates.

4. Labor Force Participation Rate: This is the percentage of the working-age

population
that is either employed or actively seeking work. A higher rate can suggest
strength in
the labor market and the overall economy.

5. Revisions: The report also includes revisions to the previous two months' data,
which
can provide insight into the accuracy of initial estimates and the direction of
trends.
How to trade the NFP report
There are two ways to trade the non-farm payrolls report, these are the long-
term trend and the near-term news.

By far the most effective way of using the NFP for trading is from the long-term
perspective.

Basically, what you are doing is using the NFP to determine or confirm the trend,
changes in trend, and major turning points in the market.

If the NFP is trending positively and showing signs of strength such as trending
above the 12-month average, then the fundamental trend of the market is bullish.

In this case, it is advisable to follow only bullish signals when they are presented
on a price chartPrice corrections and pull-backs to support levels are often
opportune entry points for longer-term style trades.

By longer-term style trades I mean trades you will want to keep open for multiple
days, possibly even weeks or months.

The other method of trading the NFP is the short-term news; is the NFP better or
worse than expected, or does it confirm or refute market expectations.

The problem with this method is that the NFP doesn’t always get the market
wound up enough to produce a move and, because of its flaws, rarely produces a
figure that is truly market moving.

In practice, the two techniques bare some similarities.

In order to capitalize on near-term expectations, you need to have a good

understanding of the long-term trends and why today’s NFP is more or less
important than any other NFP report.

Changes in trend and confirmations of expectation are by far the best signals.
As the NFP Forex publication is often a cause of increased volatility in the
currency market, real trading opportunities are present in the markets around
this particular event.

NFP trading can be extremely lucrative but also extremely dangerous if the trader
does not know exactly what to do and does not follow a well-established and
tested plan.

NFP short-term Forex trading strategies

The NFP report generally affects all major currency pairs, but the favourites
among traders are the GBP/USD, USD\CAD and the EUR/USD.

It is advisable not to trade off the release itself, and even holding trades into the
release is not something new traders should be doing.

The most effective strategy for trading the NFP report is to combine both
technical and fundamentals analysis and strategies.

Don’t trade around the actual release itself and make sure to close all open
positions at least 10 minutes before the release of the NFP report and you don’t
want to trade in the minutes following the release either.

You will often see price trading in wide ranges and volatile whipping back and
forth for the first minutes after the release and as people begin to react.

That is oftentimes simply just traders executing market orders and stops getting
hit. There is usually nothing gained by trading during this time.

In the 30-60 minutes following the release, however, the price will start to move
and ideally trend in one direction and you are looking to go with the momentum.
Prior to the release, it is very important to mark out key support and resistance
levels on a 30-60 minute chart. Then when price breaks through these levels,
you’re able to use them as your entry signal.

That way you are buying strong pairs above key resistance and shorting weak
pairs below support, with a fundamental catalyst behind them.

Trading the NFP data release are often dangerous thanks to the rise in volatility
and possible widening of spreads.

To combat this, and to avoid getting stopped-out, we recommend using the

acceptable leverage, or no leverage in the least.

Save time and money!!!

Premium Forex Signals

VIP Channel Price

• 1 week 500 ZAR

• Monthly 1000 ZAR
• Lifetime 2500 ZAR

VIP DETAILS

75 -95 % Accurate

Monthly Pips Target 2500 +

CONTACT US

(+27) 73 160 0643

Mtfx Forex Institute

Mtfx Forex Institute

Mtfx Forex Institute

[email protected]

Trade with reliable And trusted Broker

Minimum Deposit 10USD

https://track.exness.com/a/c_oejrz6urdz