What is the Non-Farm Payroll Report NFP?

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nfp forex meaning

If the labor market is growing, that means more people are making money, and the more spending there will be. Trading is about more than just knowing how markets work and finding the optimal moving average for your trading. To watch the NFP data release, you can go to the Forexfactory news calendar and get the numbers very quickly.

  • Stop losses can be placed the other side of the candlestick or maybe a bit further away.
  • On the other hand, a negative NFP release results in the USD weakening and imports becoming relatively cheaper for Australia.
  • The NFP is used by foreign exchange investors to gauge which currency they should side with based on the employment data in the report.
  • THEN watch for patterns and strategy setups we will discuss below.
  • In this situation, algos and inexperienced traders will try to push the US dollar higher, but professional traders will use the higher prices to short the greenback at a more favourable price.
  • Below is the July 8 non-farm payrolls day trading strategy example.
  • The EUR/USD won’t act exactly the same following every NFP report, it will take some practice to be able to see these trade setups play out, and be quick enough to jump in and trade them.

If it is higher than usual, it is anticipated that the economy is running slow, and policymakers will try to increase it. Such a stimulatory policy comes with low-interest rates and decreases the demand for the Dollar. As a general rule, consider using the strategy where you only trade after the report publication to lower the risks. NFP trading comes with time advantages, fast and long-term https://www.bigshotrading.info/blog/what-is-forex-trading/ profits on various instruments available to stock traders. Trading on the actual trade signal will regularly see the prices move back and forth, which is simply due to stops getting hit and investors initiating market orders. On the other hand, when the USD weakens after a negative NFP release, the GBP/USD currency pair rises in the market as lesser USD is needed to buy 1 GBP.


It is not so much one NFP number that you should be paying attention to in that scenario, but the recent series of them and most importantly, the overall trend. After the release, you wait for up to an hour for the initial post announcement price move to play out and reverse. The stop loss should be placed just the other side of the reversal candlestick pattern.

Historical price movement data shows a small negative correlation between the NFP data and the US dollar Index. The headline number shows the number of added jobs to the US economy during the previous month, excluding farm employees, private household employees, and government jobs. To take the most advantage of the report, traders also need to follow the details of the report, including the average hourly earnings and the monthly unemployment rate. Besides the non-farm payrolls, traders and investors also follow other job-related indicators that may also lead to increased volatility in the markets. Since the Fed is closely following the labour market when making changes to interest rates, all job-related reports can impact the US dollar. The unemployment rate shows the percentage of unemployed people during the previous month as a percentage of the total workforce.

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Just like most other news releases on the economic calendar, traders will use these figures to determine the strength or weakness of the underlying economy. NFP looks specifically at whether the US economy is expanding or contracting, based on the number of jobs added to the labour force. Having a NFP prediction strategy is a good way to be part of this action. The non-farm payroll report (NFP) gives a summary on the status of employment in the U.S.

nfp forex meaning

If the trade taken was short, then the stop loss should be placed one pip (plus the size of the spread) above the high that formed on the 5-price-bar movement. A better-than-expected NFP number may be beneficial for the Canadian dollar as well, as the Canadian economy is strongly tied to the US economy. More jobs in the United States could mean more orders for Canadian companies and higher export values, for instance. Since the NFP report is a widely-followed report, it doesn’t impact only the US dollar. Often, other currencies will also exhibit increased volatility right after the release of the NFP report.


The United States Non-Farm Payroll data is the most-anticipated economic news reports in any particular month. However, if the NFP report is on the negative side, depicting high unemployment, low hourly wages nfp forex meaning and fewer jobs created in the past month, the USD will start depreciating. Forex day traders wait to see what currency traders are going to do before establishing their positions and making trades.

The NFP report is typically released on the first Friday of each month, providing the total monthly increase or decrease in paid U.S. workers across most businesses. Increasing numbers may show economic expansion but may also give investors reason to be concerned about inflation and decreasing numbers suggest a broader economic concern. The NFP came in much worse than expected and this is usually the report most people pay attention to. Then, investors saw that the earnings were up (positive) and the unemployment rate fell as well, which was positive for the Dollar and the EUR/USD fell. The chart below demonstrates how erratic Forex can be after an NFP report. March 8, 2019, NFP data underwhelmed with just 20k jobs gained, falling short of expectations of 180k (job additions).

We have no knowledge of the level of money you are trading with or the level of risk you are taking with each trade. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider.

The difference between your profit target and the entry point is your ‘profit potential’ in pips. To establish an exit position, or profit target, traders use the difference between the opening price and the initial move. For example, if the initial move was 115 pips, then the profit target would be 57.5 pips. If a trader uses the 5-price-bar method, the stop loss should be placed one pip below the low of that movement if a long trade is taken.