The release of the nonfarm payroll report is one of the news that is often awaited by traders and investors. NFP often has a significant impact (high impact news) on price movements in forex, commodities, and stocks. Why can NFP be so influential? Here is a complete review.

What is nonfarm payroll?

Nonfarm payroll or NFP is data that contains changes in the number of workers in all sectors of the United States economy, except for government employees (PNS), domestic workers, non-profit employees (NGOs), and agricultural workers. This NFP data covers all business sectors that contribute up to 80% to the United States Gross Domestic Product (GDP) so it is considered the most important data in assessing the condition of its employment sector.

This data covers all business sectors that contribute up to 80 percent to the United States' gross domestic product (GDP), so it is considered the most important data in assessing the condition of the employment sector. NFP itself is a reflection of the condition of the commercial and industrial sectors. The higher the value, the higher the level of economic growth in the United States. The release of this NFP report will usually be in the spotlight of market players from various countries around the world.

When is nonfarm payroll released? And who releases NFP?

Nonfarm payroll is created and released by the US Bureau of Labor Statistics. NFP is usually released once a month on the first Friday of the month at 19:30 or 20:30 WIB in a report titled Employment Situation. You can find out the 2021 nonfarm payroll schedule on the official website of the US Bureau of Labor Statistics. This schedule is subject to change at any time if it coincides with a national holiday or there are unforeseen obstacles. However, NFP is often published on time along with a series of other US employment data such as the unemployment rate, labor force participation rate, average hourly wage growth, and so on.


Nonfarm Payroll NFP Adalah

How does the NFP report affect forex trading?

Forex price movements are always influenced by various factors including the economic conditions of various countries, especially in countries that have the most influential currencies in the world such as the US dollar. So the release of the nonfarm payroll report will affect the fluctuation of the US dollar and have an impact on market movements, this can cause various other currencies to weaken or strengthen in a short time. Well, in forex trading, compared to all other US employment data, nonfarm payroll has the greatest influence.

A rise or fall in the NFP report can cause the GBP/USD and EUR/USD currency pairs to move between 50-250 pips in a matter of minutes. However, the effect of the NFP data is not always ‘market-shaking’. There are times when the nonfarm payroll effect is only able to move GBP/USD and EUR/USD by 10-40 pips. The changes are not always in one direction.

It is possible for a currency pair to skyrocket and then fall again. Usually, this is because other employment data shows contradictions. For example, NFP surges, but average hourly wages fall or for other reasons. The release of nonfarm payrolls in forex trading also causes very large price movements (more than average) in a short time (less than an hour). Price movements around the time of the NFP release can go up, down, or up and down. In other words, the direction of the trend is uncertain. Because this data comes from the United States, it will have a big impact on almost all major currency pairs, especially EUR/USD and GBP/USD.

What should traders pay attention to before the NFP release?

You should be careful in dealing with high market volatility when nonfarm payroll data is released. Therefore, pay attention to the following things.

1. Note the date and time of data release.

By noting the date and time of the NFP data release, you have the opportunity to prepare for trading so that you can 'harvest' profits from large price changes in a short time. Prepare tactical trading techniques. Don't forget to make a deposit so that your trading account balance is sufficient, and prepare take profit and stop loss levels in a disciplined manner!

2. Close all trading positions

You can do it at least 1-2 hours before the release of nonfarm payroll data. Why before the data release? Because usually the price movement has started since the beginning of the American trading session, so all technical analysis done since the previous session can be useless.

3. Widen risk tolerance with trailing stops

This is usually done by long-term traders who are based on fundamental analysis so that their long-term trading positions are not damaged by momentary price fluctuations that arise after the release of NFP data. After the price fluctuation ends, traders will return their trading positions to their original conditions, or close trading positions if the NFP data changes the fundamental outlook. Traders are free to determine as long as it is in accordance with the characteristics and trading style of each trader. However, as a note, you must prepare yourself for various possibilities that may occur. Therefore, it is important for you to observe price changes around the time of the nonfarm payroll release first to avoid the worst possibilities that will occur.

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