DailyFX.com -

Talking Points

  • NFP Is a Highly Anticipated News Event
  • Expectations are Set at 230k
  • Traders Will Track the USD Based on Results

The release of the monthly Non-Farm Payroll figures is a highly anticipated moment for Forex traders. This is with good cause as the Non-Farm Payrolls, also known as NFP, has been historically known to produce volatility in the market place. As with other news releases on the economic calendar, traders will use this data to determine the strength or weakness of the underlying economy. NFP specifically looks at whether the US economy is expanding or contracting through new jobs being added to the labor force. With NFP set to be released this Friday at 8:30am ET,let’s take a momentto preview this week’s upcoming event.

First, NFP looks specifically at net changes in employment as jobs are created or subtracted in an economy in any given month. The term Non-Farm is used since farm / agricultural workers are not included in the employment count. The decision to not include agricultural jobs lies in these jobs being largely seasonal that could possibly produce small temporary shifts in labor reporting. Below we can see a composite of past NFP events from September 2012 through last month’s release. Through graphing we can see that employment figures have gradually been getting higher, after bottoming with the 2014 low of Just 84k new jobs reported in January.

Forex News: Trading Fridays NFP Release

To get an idea of what may be in store for this week’s NFP announcement, we can take a moment and review last month’s event. Below we can see a EURUSD 5 minute chart tracking price during the NFP news release. NFP numbers were expected to be released at 230k, meaning analysts expected 230,000 new jobs to be added to the economy. However, at the time of release the NFP number was issued lower than expected at 209k. Traders were left to react to this lower number with the market immediately reacting by selling off the US Dollar. After a few hours price action settled with the EURUSD increasing in value as much as 58 pips from the event low at 1.3189.

It should be noted that even though the news print was slightly lower than expected, traders generally took this data as USD positive. The August 1st high at 1.344, proved to be the monthly high for the EURUSD, with the USD rallying as much as 333 pips against the EUR through yesterday’s price action.

Learn Forex –EURUSD August 2014 NFP Release

Forex News: Trading Fridays NFP Release

(Created using FXCM’s Marketscope 2.0 charts)

So what should traders look for this month, with NFP totals again being released on Friday the 5th? Expectations are set for 216k new jobs to be created. Taking a cue from last month’s report, if expectations are missed this could again lead to a selloff of the US Dollar across multiple currency pairs. However if NFP numbers are better than expected, or if the number is a narrow miss, traders may take this as a positive sign and look for the US Dollar to rally. Once a direction is established traders can then trade the news using the strategy of their choosing.

Regardless if you intend to trade the news or maybe just sit on the sidelines, remember NFP can be an exciting and will often bring unexpected volatility. If you do decide to trade, stick with your news trading plan and always keep an eye on risk / reward levels while minimizing the use of leverage. To watch the event in real time register for a FREE Forex demo with FXCM. This way you can develop your new trading techniques while tracking the market in real time.

Click HERE to Register Now

Related Articles
  1. Investing News

    China’s Forex Reserves Dropped Significantly

    China’s forex​ reserves dropped by a record $93.9 billion at the end of August to $3.56 trillion because the Central Bank has been selling dollars to provide a cushion to the falling yuan​
  2. Forex

    The Pros and Cons of a Fully Convertible Rupee

    Amid the rising economic power of India, the talks of making the Indian currency fully convertible are gaining momentum. We look at the pros and cons.
  3. Forex Fundamentals

    Chinese Yuan an Unlikely Reserve Currency

    As the world's second largest economy, China's challenge to America’s dominance includes a push to make the yuan (RMB), the world’s reserve currency. Whether it can do that now is unclear.
  4. Economics

    How Currency Enforcement Helped Sink The Trans-Pacific Partnership (TTP)

    One particular barrier to trade that has received much attention of late and caused delays in negotiations of the TPP is exchange-rate manipulation, by which a country artificially devalues its ...
  5. Forex

    Top U.S Forex News Sites

    Breaking news moves forex markets. Here are the top U.S. sites for tracking forex news.
  6. Investing

    Financial News Comparison: Bloomberg Vs. Reuters

    Access to financial information has grown with the expansion of digital news. Bloomberg and Thomson Reuters lead the pack, claiming a majority of the business information market.
  7. Economics

    Who Benefits From South Korea's Lowered Interest Rates?

    South Korea is the latest country to cut interest rates in an attempt to stimulate economic growth.
  8. Forex Education

    The Top Uses For P2P Currency Exchange

    Peer-to-peer (P2P) currency exchange networks offer a viable and cheaper alternative for buying and selling currencies.
  9. Forex

    Steps To Open An Offshore Forex Account

    Here is a simple breakdown of how to open an offshore forex account for US-based users, including legal requirements.
  10. Entrepreneurship

    Top Forex Trading Apps

    A brief overview of the top apps that help forex traders with on time information, charts and more.

You May Also Like

Hot Definitions
  1. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  2. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  5. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  6. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
Trading Center