The Non-Farm Payrolls (NFP).
As you scroll through your economic calendar, you’ll likely see many data releases scheduled across the globe, that could potentially cause market moving trading opportunities. None however, are more hotly anticipated than the Non Farm Payrolls (NFP release). In this guide we’ll be looking at the ins and outs of the NFP, how often it’s released, its impact on the market and more.
What is the Non Farm Payrolls (NFP) release?
Reported monthly by the Bureau of Labor Statistics, the NFP gives traders an insight into employment changes within the US, not including the farming sector… Hence the name Non Farm Payrolls!
Farming is not included within the NFP because of seasonal changes in farming employment. It would likely skew the data, without giving an accurate representation of employment changes within the US on a monthly basis. It isn’t just the farming sector that is excluded though — some government employees, private household employees and nonprofit organisations are also left out.
One of the most important things about the NFP is that it can be used to indicate if the US economy is expanding or contracting, which has a great impact on the policies formed in the US, for example the decisions made by the US Federal Reserve.
How often is the NFP released?
The NFP is released on the first Friday of every month. Check out the table below for the NFP dates in 2019:
What currency pairs are affected by the NFP?
As the announcement affects the US dollar, all crosses with the USD will be affected by the NFP release.
Why is the NFP important?
The Non Farm Payrolls give a clear indication of the rate of growth and inflation in the US, with the difference between the expected and actual figures determining how the market reacts. If the NFP gives an indicator that there is growth in the US (higher than expected figures) this will usually be good for the value of the US dollar. In contrast, if the figures are lower than expected, this is a good indication that the economy is not growing, usually followed by a fall in the value of the USD.
However, should there be particularly fast-paced growth in the NFP figures, it may be a good indication that an increase in inflation is on the way.
The NFP release is a perfect example of an economic release that causes a significant amount of market volatility. As a trader, keeping an eye on previous NFP results and the current economic climate will allow you to prepare effectively for the volatility to come. Good luck!
