NFP (Non-Farm Earnings) is an important indicator of the current state of the economy. including information on the number of jobs plus government workers Agricultural workers are not included. domestic worker and non-profit organization workers
This release causes major changes in the currency market. Learn how it affects you and how to use it properly.
How does NFP affect Forex?
NFP (Non-Farm Payroll) is a figure released annually by the Bureau of Labor Statistics.
For the Federal Reserve Bank, employment is a huge factor to consider. For example, work is an important metric to consider.
When employment is high and good, policymakers pursue an expansionary monetary policy with lower interest rates.
If it is higher than usual, the economy is expected to slow down and policymakers will try to increase it. This stimulus policy is accompanied by low interest rates and reduces demand for the dollar.
NFP is the most affected currency pair
The US dollar (EUR/USD, AUD/USD, USD/JPY, USD/CHF, GBP/USD, and others) is most affected by the NFP release. Traders, you should remember that there are other pairs that can affect.
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Trading tips when using NFP data releases
The release of NFP data comes with an additional.
The NFP is published on the first Friday of each month.
Currency pairs other than the US dollar can also be volatile.
NFP and Forex Trading: Key Points
The Non-Farm Payroll (NFP) release creates volatility in the forex market.
NFP measures net change in the workplace.
Forex traders use the economic calendar to prepare for the release of the NFP.
What is NFP?
Non-Farm Payroll (NFP) is a key economic indicator of the US economy. This represents the number of jobs added, including farm workers, civil servants, private household workers, and non-profit workers.
The release of NFP usually leads to big movements in the market. NFP data is usually released on the first Friday of each month at 8:30 AM ET. This article will explain the role of NFP in the economy and how to use NFP release data in a forex trading strategy.
How does NFP affect Forex?
The NFP data is important because it is released monthly, which makes it a very good indicator of the current state of the economy. The data is released by the Bureau of Labor Statistics and the next release can be found in the economic calendar.
Employment is a very important indicator for the Federal Reserve Bank. When unemployment is high, policymakers have an expansionary monetary policy (stimulative, with low interest rates). The objective of expansionary monetary policy is to increase economic output and increase employment.
So if unemployment is higher than normal, the economy is thought to be below its potential and politicians will try to stimulate it. A stimulative monetary policy means lower interest rates and reduces demand for the dollar (money flows out of a low-yielding currency). To learn exactly how this works, see our article on how interest rates affect forex.
The chart below shows how volatile forex can be after the NFP release. Expected NFP results for March 8, 2019 were 180,000 (job gains), the actual result was disappointing with only 20,000 jobs added. As a result, the dollar index (DXY) fell in value and increased volatility.
Forex traders should avoid publishing data such as NFP. Traders may be stopped due to the sudden increase in volatility. When volatility increases, spreads also increase, and increased spreads can lead to margin calls.
WHICH CURRENCY PAIRS ARE MOST AFFECTED BY NFP
The NFP data is an indicator of US employment, so your currency pairs including the US dollar (EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CHF etc.) are heavily influenced by the data release. .
Other currency pairs are showing increased volatility following the NFP release, and traders should be aware of this as they are likely to get stuck. The chart below shows CAD/JPY at the time of the NFP data release. As you can see, the increase in volatility can prevent a trader from exiting a position even if there is no forex trading linked to the USD.
Salary Publication Dates for Needy.
The Bureau of Labor Statistics usually releases NFP data on the first Friday of each month at 8:30 a.m. ET. Publication dates can be found on the website of the Bureau of Labor Statistics.
Due to the volatile nature of NFP output, we recommend using a pull strategy rather than a split strategy. Using a pullback strategy, traders should wait for a currency pair to pull back before entering a trade.
Using the same example above (NFP 20k vs. 180k expected) we expect the US dollar to fall. In the example below, we are using EUR/USD. Since the non-farm payrolls data came in worse than expected, we expect a rally in the EUR/USD pair.
NFP DATA MARKETING: TOP TIPS AND READ MORE
Here are some tips to keep in mind when using NFP data to report your Forex trades:
NFP data is released on the first Friday of each month.
The release of the NFP data is accompanied by increased volatility and widening spreads.
Non-US dollar currency pairs may also see increased volatility and widening turnover.
Trading with the release of NFP data can be dangerous due to increased volatility and possible price spreads. To combat this and avoid suspension, we recommend using appropriate leverage or no leverage at all.
Other key data releases to watch for:
While the NFP generally moves the market, figures such as CPI (inflation), Fed funds rates, and GDP growth are also important figures.
If you want to learn more about trading news and data releases, check out our new trading guide. We also recommend reading the Traits of Successful Traders guide to avoid the number one mistake traders make when trading forex.