What is Non-Farm Payrolls?

What are Non‑Farm Payrolls (NFP)?

Non‑Farm Payrolls measure monthly changes in U.S. employment excluding farm workers, private household staff, and nonprofits. Released the first Friday each month, NFP is a top‑tier market mover for USD, rates, and risk assets.

What’s Inside the Report

• Headline payrolls: Net jobs added or lost (Establishment survey).
• Unemployment rate (U‑3): From the Household survey; watch labor‑force participation.
• Average hourly earnings: Wage growth feeds services inflation and policy expectations.
• Revisions: Prior months are often revised—sometimes the real story.

Why NFP Moves FX

Strong payrolls and wages lift front‑end yields and the dollar by raising odds of a hawkish FOMC. Weak data does the opposite. Because positioning is often heavy into the release, surprises can trigger sharp squeezes in EUR/USD, USD/JPY, and high‑beta pairs.

Trading Playbook

• Size down or pre‑hedge; spreads and slippage spike at 8:30 ET.
• Wait for the 2–3 minute washout; then align with rate moves if they persist.
• Track wages and revisions—wage surprises often drive the second leg.
• Use key levels to structure risk; avoid chasing the first candle.

Positioning and Risk

Into NFP, options markets often price elevated volatility. Consider reducing directional exposure or using defined‑risk structures. Algos can whipsaw the first seconds; let Treasuries lead your FX bias. Document outcomes to refine your playbook over time.

Scenario map: A strong headline with hot wages and rising participation is USD‑positive; a soft headline with cooling wages and downward revisions is USD‑negative. Mixed prints often net out in rates—trade only if the front end picks a direction.

Additional Clues

• ADP and ISM employment components offer noisy, early hints—treat as context, not signals.
• Watch continuing claims trends; turning points often foreshadow payroll slowdowns.
• Sector leadership (goods vs. services) influences which FX pairs react most.