Market Impact: High
Non Farm Payroll
Non Farm Payroll (NFP) assesses the overall health of a country’s labor market. The impact it brings to the currency market disturbs a somewhat calm and steady trending rates. Major positions are being re-aligned as wrong assumptions by traders would translate into gigantic losses or colossal gains when they got the NFP trend right.
Reactions to this report is enough to reverse a steady 100 pip trend that took almost a week to reach its level only to turn around 200 pips within a matter of hours. This report is being observed by everyone, currency traders with huge lot sizes throw in their orders to ride the well oiled movements and liquidity it provides. Since traders have different assessments on the outcome of the report, huge transaction sizes in opposite directions creates a tug of war that generates huge fluctuations in price.Trading the non farm payroll can be risky with a limited principal since it has a high tendency to reverse 50 pips anytime and instantly.
This report features the total new jobs created within the prior month, excluding farm workers, government employees and self employed individuals. The relevance of this report is associated with spending as jobs provide people the salary needed to stimulate retail sales and other consumer spending related reports. A low NFP report exerts pressure on the labor market as it erodes the employment ratio if new jobs are created on a much slower pace than the general rise in population.