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What is the NFP in Forex (Non-Farm Payrolls)?
What is the NFP in Forex (Non-Farm Payrolls)?

To succeed in the financial market, it is important not only to have amazing self-control but also to be interested in the technical side of trading. In particular, one of the important aspects for a novice trader is the concept of what the NFP in Forex is. This will come in handy if your strategy involves trading the news. Taking into account the data of NFP reports, you can achieve excellent results and almost always predict the consequences of your actions.

Let us figure out what the NFP is

The term NFP is short for Non-Farm Payrolls. This is an official monthly report that shows the employment rate in the United States (excluding agriculture). This industry is deliberately overlooked for a couple of reasons:

  1. The contribution of the agricultural sector to America's gross domestic income is negligible, so it is not taken into account.
  2. The number of employed in this industry largely depends on the season.

Many experts call the NFP one of the fundamental indicators used in market research, as it reflects the actual number of paid jobs that currently exist in the United States (including full-time and part-time employment in government agencies and state-owned enterprises).

 

Starting to look into what the NFP in Forex is you will understand that it is one of those things moving the global market. As soon as the news is published, there is some movement in the financial market, and if the news is important, there may be a serious capital redistribution.

On the day of publication of the report, only a small fraction of traders enter the market before the NFP data is released.

To get reliable NFP data, you should visit the official website of the US Department of Labor. The data are presented in a tabular form, so it is very convenient for studying. Usually, the report is published on the first Friday of a new month at exactly 8:30 AM (EST).

How the report affects the financial market

When learning what the NFP in Forex is, you should keep in mind that this indicator affects not only the financial market but also commodity and stock markets. The point is that a country's employment growth is proof of economic growth and prosperity. Increased demand for goods or services in a particular business segment allows you to expand production, increasing the number of jobs.  And the actual expansion of production leads to an increase in the gross domestic product.

Given that it is the US dollar that has a huge impact on all other currencies in the financial market, GDP growth cannot be ignored. Thus, understanding what the NFP in Forex is and its role in the currency market, each trader can receive reliable information from sources, analyze it and enter into profitable trades.

Benefits of using NFP news

Every participant trading the USD dollar must take the NFP data into account. The main indicators in the report are the employment rate and the unemployment rate. After getting this data, the trader will need to compare it with the predicted values. As a rule, the market is dominated by the following trends:

  1. If the unemployment rate is higher than projected, the US dollar starts to fall in price.
  2. If the employment rate is higher than projected, the US dollar strengthens.

 Knowing only the two signs of further market direction, everyone can make some money, especially if they enter the market with favorable leverage.


The information is especially important for those who trade the US dollar and Japanese yen currency pair. After all, the United States is the main import partner of Japan. And the higher the country's GDP and personal income growth, the greater the share of imported goods.

Useful Tips

If you are wondering what the NFP in Forex is and how the report data helps traders, you can use some useful tips when entering the market:

 

  1. You should start trading only if the difference between the predicted and actual ​​prices is at least 30,000 units.
  2. The market response is not always obvious, which is important to remember. Sometimes slippage and gaps may occur for lack of liquidity.
  3. There will be no significant market movement if the actual figures in the report are close to those predicted.
  4. On average, pending orders should be placed 15 points from the current price, because the movement can be both in your favor and against you. And it is better not to close trades manually, but use a stop loss or take profit.

 

Remember that after learning what the NFP in Forex is, you should not defy common sense and focus only on the report. The market is unpredictable. Sometimes expert opinions lead to strong market movements, which are past their peaks before the official information is published by the relevant US Department.

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