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Jobs are the lifeblood of any economy and if more jobs are being created, it is a sign of a healthy and strong economy. With so many sources of economic news and other indicators to follow, less experienced traders may wonder why NFP data is such an important resource to track. We introduce people to the world of trading currencies, both fiat and crypto, through our non-drowsy educational content and tools. We’re also a community of traders that support each other on our daily trading journey.
How to best trade the NFP release can be a very difficult question, and the answer can change from month to month. Therefore, beginner traders are best served by simply observing these announcements for a while and learning to understand what the market is looking at on different occasions. In recent years, we have seen that the NFP announcements typically cause a lot of noise, but not necessarily a lot of sustained price movement. As the world emerges from the coronavirus pandemic, most central banks are maneuvering to tighten monetary policy. In that scenario, it does make sense that a strong jobs market points towards the US Dollar strengthening due to tightening monetary policy. However, under normal circumstances the exact opposite could also be true because of the demand equation concerning foreign goods imported into the US for consumption and business use.
Experts’ Final word on NFP trading strategy
Learn strategies for day trading the non-farm payrolls (NFP) report, one of the biggest market moving events in forex. These are strategies you can build off whether day trading the EURUSD or the GBPUSD. The NFP came in much worse than expected and this is usually the report most people pay attention to. Then, investors saw that nfp forex meaning the earnings were up (positive) and the unemployment rate fell as well, which was positive for the Dollar and the EUR/USD fell. The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate. 72% of retail client accounts lose money when trading CFDs, with this investment provider.
What is the meaning of NFP in forex trading?
Share: Non Farm Payrolls (NFP) measures the amount of jobs gained in the U.S. during the previous month that aren't farm related.
You may find you will get better results applying these trading strategies to the FOMC releases when rate hikes and other monetary policies are announced. Be warned that spreads can be wide, and the price can be very jumpy, just after the NFP release. This can make trading difficult, even once a few minutes have passed following the announcement. On the contrary, when a negative NFP is released, the USD weakens against the Euro and the currency pair EUR/USD rises. This results in EU spending less than they used to, for imports from the US as lesser Euros are needed to buy more of USD.
Interpretation for the economy
Below is a video of a recorded session while day trading the NFP on November 4, 2022. As of August 1, 2023, the EURUSD has average daily movement of 76 pips, while the GBPUSD moves 102 pips per day, using a 5-week average. There will often be plenty of trading opportunities after the release.
- As we have our fundamental driver (NFP report) and a key technical level.
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- The bid price moves and starts to trend in one direction after 30 to 60 minutes following the report publication.
- As you can see, I noted on my charts where I missed some opportunities or made mistakes so that I can try to improve those areas.
- NFP (The non-farm payroll) figure is a major economic index that measures the employment situation in the USA, which means the number of people on the payrolls of all non-agricultural businesses.
- A worse than expected NFP often leads to a falling US-Dollar as investors sell their US-Dollars.
