If you are a forex trader, you will surely be familiar with the name Nonfarm (non-agricultural payroll) appearing regularly on the first Friday evening of the month, right? Because Nonfarm information, when announced, has a great impact on some currency pairs. Can make them “dance” violently in just a few minutes. Many traders have taken advantage of this point to trade during news hours to increase their profits. So what is the non farm payroll? How to trade when non-farm payrolls are announced? Let’s learn details with Learn Forex Trading.
Khái niệm what is the Non farm payroll?
What is the Non farm payrollì? What is the Non farm payroll newsletter? This is a term used to refer to non-agricultural occupations in a country’s economy. Specifically, these are industry, commerce, and services. And other fields not directly related to agricultural production, animal husbandry, and forestry. In American economics, Non-Farm is used to refer to occupations not related to agriculture. Of total employment in this country. Non-farm employment is an index often published monthly in the US to evaluate the non-farm employment situation in the economy. And plays an important role in guiding the government’s economic policies.
Just like Non-Farm, the CPI also plays an important role in reflecting the trend and level of price fluctuations in consumer goods and services over time. Learn more about what is cpi consumer price index on Self-Teach Forex to better understand.
When was Non-Farm announced?
Normally, the Non-Farm Employment index will be published at 8:30 am (local time). Every Friday, at the beginning of the month, by the US Department of Labor. This is an important index assessing the non-agricultural employment situation in the US. And is of importance to investors and economic experts around the world.
See more: What is Fomo? Does it make traders insecure?
Where to see Non-Farm news?
You can see Non-Farm Employment news on many reputable economic news sites such as Bloomberg, Reuters, CNBC, or the website of the US Department of Labor. In addition, there are also many websites and forums specializing in investment and economics that will also provide comments and forecasts about this index. You can search on Google to find accurate and reliable sources of information about the Non-Farm Employment Index.
Why is NFP – Nonfarm Payrolls important?
NFP – Nonfarm Payrolls are an important indicator for the US and world economy. This is an index assessing the non-agricultural employment situation in the US. Includes industry, commerce, and services. This index shows the number of jobs created or lost in the previous month. And helps assess the economic situation of the country. Forecasts and results of the NFP index can influence investment decisions. And the policies of investors, businesses, and the government.
If the NFP index increases, this shows that the economy is stable and has growth potential. At the same time, it increases job opportunities and people’s income. On the contrary, if the index decreases, this may indicate that the economy is experiencing difficulties and facing the risk of recession.
Therefore, the NFP – Nonfarm Payrolls index is considered one of the most important indexes. To measure the health of the US and world economies.
Non-farm is important and it has more or less an impact on the US economy in particular and the world economy in general. In addition to Non-Farm, the FED also has similar importance. Learn about what is the us federal reserve to understand better.
Indicators and data components are published in the newsletter what is the Non farm payroll?
Below are the indicators and data elements published in the Non-Farm newsletter.
The three main indexes announced include:
Index of the previous period.
Forecast index: Experts’ judgments were made at the beginning of the week.
Index announced this period.
The difference between these three indexes will greatly impact investor psychology. Causing strong market fluctuations. Especially when the published data is completely different from the predicted data. For example, the employment rate in June was expected to increase, but when non-farm payrolls were announced, it decreased. This will cause the USD to decline, causing many other foreign currency pairs to fluctuate extremely violently!
The three published data components include:
Non-farm Employment Change. Includes the number of industrial and service sector jobs created last month.
Unemployment Rate. Includes the proportion of workers who are unemployed but are still actively looking for a new job in the last month.
Average Hourly Earnings: the rate of change in earnings over the previous month.
Currency pairs are deeply affected when Non-farm is announced
Non-farm Payrolls (NFP) are one of the most important economic indicators. And has a profound effect on currency pairs in the foreign exchange market. Which currency pairs are most affected when announcing what is the Non farm payroll? Includes currency pairs as below:
- EUR/USD: This is the most traded currency pair in the foreign exchange market. When the NFP index is better than forecast, the USD usually appreciates against the EUR.
- USD/JPY: This is another currency pair that is also strongly influenced by the NFP index. When the index is high, the USD usually appreciates against the JPY.
- GBP/USD: This is a currency pair strongly influenced by the NFP index. Due to America’s influence on the British economy. When the NFP index is better than forecast, USD usually appreciates against GBP.
- USD/CHF: This is a currency pair affected by changes in USD in the market. When the NFP index is better than forecast, the USD usually appreciates against CHF.
- USD/CAD: This is a currency pair influenced by the economic situation in the US and Canada. When the NFP index is better than forecast, the USD usually appreciates against the CAD.
In short, the currency pairs most strongly influenced by the NFP index are those in which the USD is the main component. During the release of the NFP newsletter, the prices of these currency pairs often fluctuate strongly and can create great investment opportunities for foreign exchange investors.
How to trade when non-farm payrolls are announced
When non-farm Payrolls (NFP) are announced, the foreign exchange market will become very vibrant and have many trading opportunities. Here are some ways to trade the NFP release:
Wait and watch the market
Before the NFP announcement, traders should monitor and evaluate the economic, political, and social situations to predict the NFP outcome. They can then make appropriate trading decisions.
Trade at current prices
If you want to trade at the current price, you can place a buy or sell order on your currency pair before the NFP news is published. However, it should be noted that the price will fluctuate strongly after the NFP news is published.
Trade with pending orders
If you want to wait for better prices, you can place a pending order on your currency pair before the NFP announcement. For example, if you are trading on the EUR/USD pair, you can set a buy limit or sell limit order based on the price you expect.
Trading after the NFP news is published
If you do not want to trade directly before the NFP news is published, you can wait and trade after the price has stabilized. However, it should be noted that prices can fluctuate widely and the market can be difficult to control after the news is published.
Additionally, when trading during the NFP announcement, traders should set stop loss and take profit to minimize risk and maximize profits.
See more: How to register ICMarkets broker account
Epilogue
Thus, Non-Farm is an important economic index published monthly in the United States, showing the number of non-farm jobs in the economy. The NFP newsletter is of significant importance to investors and forex traders, playing an important role in deciding their trading and investment strategies.
Through this article, Learn Forex Trading hopes you have a better understanding of the concept of what is the Non farm payroll. newsletter, as well as the indicators and data components published in the NFP newsletter. If you plan to participate in the foreign exchange market and trade when the NFP newsletter is published, remember to carefully follow the risk management principles and have an appropriate trading strategy to achieve the highest profits.
