What is Non-Farm Payrolls?
Non-Farm Payrolls (NFP)
Forex Trading Glossary
Quick Answer: NFP is the monthly US jobs report showing employment changes excluding farm workers. It is the most important economic indicator, causing massive forex volatility on first Friday of each month.
What are Non-Farm Payrolls (NFP)?
Non-Farm Payrolls measure the monthly change in U.S. employment excluding farm workers, private household staff, and nonprofit employees. Released on the first Friday of each month, NFP is one of the most market-moving economic reports for the U.S. dollar.
Why NFP Matters
- Labor market health: Signals the pace of job creation and economic momentum.
- Policy implications: Strong readings keep the Federal Reserve on a hawkish path, while weak data encourages easing.
- Risk sentiment: Surprises can spark broad moves in equities, bonds, and commodities.
- Volatility catalyst: Currency pairs such as EUR/USD and USD/JPY can move 50-150 pips within minutes.
Brace for Volatility
Spreads can widen dramatically around the release. Reduce position size or use options if you plan to trade NFP directly.
Trading the Release
- Focus on the full picture: Watch unemployment rate, labor-force participation, and revisions.
- Plan scenarios: Prepare reactions for beats, inline prints, and misses.
- Wait for confirmation: Let the initial whipsaw settle before entering directional trades.
- Combine with technicals: Use key support/resistance or trendlines to structure risk.
Related Terms
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