The US economic calendar is stacked with many events throughout the month but none
is more anticipated that the release of Non-Farm Payroll figures. Non-Farm Payrolls also known as NFP,
is reported monthly by the US Bureau of Labour Statistics to give a timely glimpse into employment
changes inside of the United States. Ultimately this report can give traders insight into whether the US
economy is expanding or contracting while directly influences the decisions of policy makers such as the
US Federal Reserve. With this in mind let’s take a closer at this news event, so we can better
understand NFP and its potential impact on marks.
First, NFP looks specifically at net changes in employment as jobs are created or subtracted in an
economy in any given month. The term Non-Farm is used since farm / agricultural workers are not included
in the employment count. The decision to not include agricultural jobs lies in these jobs being largely
seasonal that could possibly produce small temporary shifts in labour reporting. For this reason certain
government employees, private household employees and non-profit organization are also not included in
NFP figures are known to have significant swings. Traders often speculate on these changes in NFP
figures, which often causes market volatility on the day of their release, NFP numbers have been known
to produce volatility in the Forex Market. Considering what occurred during the last month’s NFP release
on a USD/JPY 5min chart. NFP was released at 8:30 am ET and the numbers came out at 227k, significantly
better than initial expectations of 180k. During this time the USD/JPY declined as much as 91 pips in
the first 5 minutes of trading. Over the course of the next 2 hours, the USD/JPY eventually fell as much
as 113 pips!
Using fundamental analysis and historical data a short-term high risk position is traded winning traders
up-to 1000x leverage and significant profit ratio because traders, retail and institutional (huge), make
educated guesses (bets) before and during the announcement. The U.S NFP is a key fundamental
announcement that happens every month, since a lot of people are trading it, that drives up volume and
in turn leads to higher volatility (bigger moves) . This is all driven by market sentiment .