NFP
The non-farm payroll (NFP) report is a key economic indicator for the United States. It is intended to represent the total number of paid workers in the U.S. minus farm employees, government employees, private household employees and employees of nonprofit organizations.
Once per month, the Non-farm payroll let’s the financial markets take on the big spotlight. Every first Friday of the month, at 12.30 pm GMT, the US Bureau of Labor Statistics publishes the employment data, which gives a good glance on the state of the american economy. The US Non-Farm Payrolls release is the biggest fundamental piece of data the market gets regularly.
How does Escrow Work?
This report is important because the US is the largest economy in the world and its currency (USD) is the global reserve currency. The many economies peg (tie) their currencies value to the reserve currency, many commodities such as gold and oil are priced in terms of the reserve currency and the local economy debt is priced in terms of its own currency. The Non Farm Payroll report, because of its importance to the reserve currency, tends to move all markets: currencies, equities, treasuries, interest rates, and commodities. It does so immediately after the release of the economic data and sometimes dramatically.
How does the NFP impact the USD?
A NFP which is stronger than the estimate (also known as the forecast) indicates that the labor market is stronger than what the markets expected, and the dollar often rises as a result. Why? Let us use a stock market analogy to answer this question. Just like a company stock often rises after the company releases a strong financial report, so to the US dollar can be thought of as the stock of the US economy. Thus, when the US releases a strong economic report, the stock (US dollar) often rises against other currencies (such as the euro, pound or yen) as a result. Conversely, a weak NFP report indicates that the labor market is weaker than what the markets anticipated, and a weak reading can push the dollar lower against other currencies.
The NFP Trading Strategy:
The NFP report generally affects all major currency pairs, but one of the favorites among traders is the GBP/USD. Because the forex market is open 24 hours a day, all traders have the ability to trade the news event. The logic behind the strategy is to wait for the market to digest the information's significance. After the initial swings have occurred, and after market participants have had a bit of time to reflect on what the number means, they will enter a trade in the direction of the dominating momentum. They wait for a signal indicating the market may have chosen a direction to take rates. This avoids getting in too early and decreases the probability of being whipsawed out of the market before it has chosen a direction.
Conclusion:
Our experts have different point of views, techniques and feelings towards the Non-Farm Payrolls release. There is not one only way to approach it. The strategy to trade (or not) the release every trader should take is finally something to their choice. We hope these different views shared here can help you to take your own one and successfully invest with Kruger Financials to manage your accounts on trading this very highly volatile macroeconomic event, NFP.
NFP Trading Plan:
$5,000 and Above 25% Returns 48-hour period
