Many foreign exchange (FOREX) investors trade only at the time of the release of the US Non-Farm Payroll (NFP) Report. They are attracted to the volatility of currencies, particularly major pairs involving the dollar. American, which occur during that time. Investors who rely on this and other financial news events for their trading are known as news traders. Many others, although they may use other trading methods, will certainly include the NFP in their trading calendars. Let’s find out why so many traders are interested in this report.
The NFP is published once a month, usually on the first Friday at 8:30 am New York time. Sometimes it will go out on the second Friday of the month instead of the first, but always at the same time of day. The US Department of Labor is responsible for compiling and publishing the report, which is kept secret until the official release time arrives. The report contains data on unemployment in the non-agricultural sectors of the US economy. By the way, other industrialized countries also publish some semblance of this type of report. Simply put, if the numbers released in the NFP represent a major revision to previously made estimates, the market response is likely to be quite pronounced.
The reaction to the anticipated NFP data by traders around the world, in terms of buying and selling activity, usually drives the price of the US dollar up or down. This usually occurs at the time the report is made public. Sometimes the spike occurs early, that is, within the minute immediately before the 8:30 am launch. Although less frequently, it has also been observed that the spike can occur up to 15-20 minutes after the publication of the report.
Other regular financial reports can also move currency prices, but they are not as consistently dramatic or dynamic as the NFP in their results. Over the past two years, the range of movement in the US dollar price as a result of NFPs has generally been between 50 and 90 pips in a general direction. The retracement, that is, the movement of the price towards the original price, often provides additional trading opportunities. Many traders experience returns ranging from 5 to 20 percent just from this report.
Why does the NFP stand out in its ability to move the market? The NFP is published by the US government as an official statement of what the US economy is doing. Based on the content of the report, the country’s health measurement is displayed in terms of its employment situation. Many academics and traders view the employment situation in a country as a leading indicator of how things are doing economically in that country. If the employment situation is bleak, so must be your overall economy. A weak economy invariably means bad news for that particular country’s currency.
It must be recognized and appreciated that the US dollar has always generated a lot of interest among traders around the world. Known for its liquidity, relative stability, and being backed by the world’s largest economy (at least until China takes the number one spot as expected in 2026), the greenback is often accepted as payment for goods and services in everyone. This is true even when it is not the official currency in a given jurisdiction. It is one of the relatively few currencies known as “hard currency” in the world financial arena. It is always in the spotlight as a global player.
Recent times have seen the US dollar on a weakening trend compared to other currencies. Undoubtedly, world events, including the US involvement in Iraq, Pakistan and Afghanistan, have contributed to the negative view shared by some about the value of the dollar. On the other hand, some see it as a good opportunity for US corporations, large and small, to export goods and services to other countries. This may result in a long-term dollar bounce.
Various strategies have been devised to take advantage of the trend of market prices to rise during the time of the NFP press release. Unsurprisingly, some strategies work better than others. More and more vendors and programmers are developing and selling automated software to merchants interested in the fast-paced environment surrounding the launch of NFP. The price range for such software can be anywhere from a few hundred dollars to several thousand dollars. Of course, manual NFP trading can still be done successfully, as many traders are proving. Regardless of the method or strategy, many in the trading world will continue to pay attention to the NFP and use its release as one of the best regular and recurring opportunities to trade the FOREX market.
