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What is Non-Farm Payroll, and how can it affect our technical forecasts and trades?


What is Non-Farm Payroll?

Non-Farm Payroll (NFP) is a monthly economic indicator that measures the number of jobs added to or lost from the non-farm sector of the United States economy. The NFP report is released by the Bureau of Labor Statistics (BLS) on the first Friday of every month and is one of the most important economic releases in the United States.

Traders and investors closely watch the NFP report because it provides valuable insight into the health of the US economy. A strong NFP report can lead to a rise in the US dollar, while a weak NFP report can affect risk appetite and lead to a decline in the dollar.


How Can NFP Affect Our Technical Forecasts and Trades?

The NFP report can have a significant impact on technical forecasts and trades. If the NFP report is stronger than expected, it could lead to a sharp rally in the dollar in the Forex, Crypto, and Equity markets. On the contrary, if the NFP report is weaker than expected, it could lead to a sharp drop in the dollar's value in the markets.

For example, if the NFP is stronger than expected, the dollar would rise and see a bearish trend in gold, bitcoin, and EURUSD, and an advance in the USDCHF and USDCAD chart.

In addition, the NFP report can also affect the volatility of the market. For example, if the NFP report is a surprise, it could lead to increased volatility in the market. This is because traders and investors will be unsure how to react to the news, and this uncertainty can lead to increased trading activity.


How to Trade the NFP Report?

In our view, the best way is not to trade, but if you want to trade, there are several ways to trade when the NFP report is released.

One popular way is to use technical analysis to identify potential trade setups. If you have discovered a suitable trading opportunity through technical analysis and the result of the NFP report is in the same direction as you predicted, you can trade. For example, if the market is in an uptrend, a strong NFP report can lead to the dollar rising and breaking the resistance levels in that direction. Conversely, if the market is in a bearish trend, a weak NFP report could lead to the dollar depreciating and breaking support levels in that direction.

Another popular but risky way to trade the NFP report is to use news-based trading strategies. This includes market trading immediately after the release of the NFP report. News traders usually look for large but short-term price movements immediately after the report's release and try to make short-term trades in the direction of these movements.

NFP is released at 08:30 a.m. EST (Eastern Standard Time)(New York time) on the first Friday of each month.

Professional and large traders avoid opening new trades during the closing hours of Thursday's trading before the release of NFP news. As the NFP news comes closer, the market volatility becomes less and less, and finally, with the announcement of the NFP news, if the news is not according to the previous expectations, there will be a big explosion in the price.

ForecastCity's forecasts are based on technical analysis. Therefore, it is impossible to make a proper technical analysis for some charts when important economic news, which influences the main market trend, is released.
There is five important economic news that can produce very severe fundamental swings in the market. The days in which this kind of news is released are called risky days, and we should consider some points on such days.

Important Tips

The NFP report is a valuable economic indicator that can have a significant impact on the markets. Traders and investors should carefully consider the NFP report when making their trading decisions.

ForecastCity strongly recommends paying serious attention to our safety belts:

  • We are more careful about our trades the week before an NFP announcement.
  • We decrease the investment amount in new trades during the last days of the week when NFP news is announced.
  • As professional traders, we refrain from making new trades, specially Long-Term ones, from the mid-hours of the New York market on Thursday.
  • We put the stop loss point of the trades, which are in the profit way, in a suitable place of profit area. So the trade will close with profit if the price reverses.
  • Tomorrow is another day. We close trades with small profits or losses in the hours close to the NFP announcement to reduce the risk of our open trades.
  • If market volatility is high after the announcement, we will trade more cautiously on Monday as well.

Navid Jafarian

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