What is Non-Farm Payroll?
The NFP is released by the US Department of Labour. The report is usually published on the first Friday of every month. The data in the report is an indicator of the employment situation in the US. It measures the change in the number of newly employed people in the US, excluding workers in the farming industry.
A number which is higher than the market forecast is considered Bullish for the US Dollar and lower than the forecast is Bearish.
Non-Farm Payroll Date and Time
Time of the event: July 7th, 2017 13:30 GMT
Why is NFP a trading event?
The release of Non-Farm Payroll report is a trading event that can move the currency pairs such as the Euro (EUR/USD) up to 100 pips in a minute.
If you are new to Forex, you need to understand that the release of the Non-Farm Payroll report every month is a market moving event. The Progress of the US Economy is measured by 12 major fundamental events and the Non-Farm payroll is a leading indicator that measures the job creation aspect of the economy.
The NFP report provides information about the change in the number of employed people during the previous month, excluding the farming industry. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity.
Most professional traders are waiting for the event this week. The Dollar has been taking some heavy punishment over the last few weeks and this could be the turning point for it moving forward.
Platinum members look forward to trading the Euro on the 4th buy or sell zone on NFP for stop hunts and trend reversals with 20 pip stop losses.
What happened Previously?
According to the report released in July for the month of June, the Non-Farm Employment Change produced much better figures then expected easing the pressure on the labour market which had come from a very bad May report of only 138k jobs created. The July report came out at 222K against a forecast of 175K. For the May report which was released in June, the number of jobs created was again very disappointing with only 138K jobs created while it was estimated at 181K. That resulted in the market losing confidence in the US labour market recovery in the short-term and the US Dollar was slain in the charts for the rest of the day.
Market sentiments
Fundamentals is a big part of trading and sentiment is built on market trends.
The first Friday of the month brings the Non-Farm Payrolls report and this time, it feeds into the highly-anticipated Jackson Hole Symposium. While a balance sheet reduction in September is “baked into the cake”, the fate of the next rate is quite unclear. Fed officials are not that eager to provide hints. The jobs report could lead the way. And once again, it’s all about the wages.
Wage growth accelerates to 2.7% or beyond: A pick up in wage growth will be a welcome sign that job gains are triggering inflation, raising prospects for a third rate hike in 2017 and a firmer message by the Fed in the Jackson Hole Symposium.
Do trade the NFP with caution.
How to trade the Euro on NFP
The expected number for April in the NFP report to be released this Friday is 181K. The deviation figure to trade the NFP is +35/-35.
Let me explain what this means:
The Bear Trade
If the actual number on NFP is above 216K compared to the estimated 181K, sell the EUR/USD with 25 pips stop loss.
The Bull Trade
If the actual number on NFP is below 146K compared to the estimated 181K, buy the EUR/USD with 25 pips stop loss.
How to trade the Yen on NFP
The expected number is 181k. The deviation to trade the Non-Farm Payroll is +35/-35.
The Bull Trade
If the NFP number is above 216K, buy the USD/JPY with 25 pips stop loss.
The Bear Trade
If NFP number is below 146K, sell the USD/JPY with 25 pips stop loss.
Important Note: Always keep an eye on the market news and feeds in order to trade the event with proficiency. For Platinum members, it would as easy as logging on and having the “Institutional News Feed” open.
The Platinum News Trading Strategy
How to Trade the NFP using the Platinum Trading System:
Always keep the Institutional News feed open.
Make sure you have your eyes on the clock.
As soon as the news event comes out there will be a spike. The objective is simple: Go long or short in the 4th buying or selling zone of the day with 20 pips stop loss. We are looking for 30 pips reversal from this with a 20 pip stop loss.
Regardless of the result of the trade, this will be the only trade info on the system for NFP.
Never do revenge trading.
Time for the trade to be taken is between 13:30 and 13:45. The trade is invalid after this time.
You must be there live to take the trade on trading zone 4.
Points to be noted when trading during NFP days:
Be careful of being in trades an hour before and after NFP.
Trade the 2nd level zones and trade the range prior to 12:00.
Do not trade USD/CHF on NFP days.
To trade the news event, trade 4th buying or selling zones on the actual news event with a 25 pip stop loss and 30 pips take profit.
Trading on NFP days is a VERY high risk and many traders get chopped up trying to call the turn.
Do not worry too much if you take the trade or don’t take the trade, there will be plenty more coming our way.
Hopefully, you have enjoyed today’s article as much as I have enjoyed writing it for you to read. See you in the next one.
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Hopefully, you have enjoyed today’s article. Thanks for reading! Have a fantastic day!
Nisha Patel
Live from the Platinum Trading Floor.