What is the NFP?
The non-farm payroll (NFP) figure is a key economic indicator for the United States economy. It represents the number of jobs added, excluding farm employees, government employees, private household employees and employees of nonprofit organizations.
NFP releases generally cause large movements in the forex market. The NFP data is normally released on the first Friday of every month at 8:30 AM ET.
NFP data is important because it is released monthly, making 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 on an economic calendar.
Employment is a very important indicator to the Federal Reserve Bank. When unemployment is high, policy makers tend to have an expansionary monetary policy (stimulatory, with low interest rates). The goal of an expansionary monetary policy is to increase economic output and increase employment. Due to the volatile nature of the NFP release, UpWealth Finances uses pull-back strategy rather than a breakout strategy. Using a pullback strategy, traders should wait for the currency pair to retrace before entering a trade.
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NFP data is released on the first Friday of every month.
The NFP data release is accompanied with increased volatility and widening spreads.
Currency pairs not related to the US Dollar could also see increased volatility and widening spreads.