Many foreign exchange market investors (FOREX) trade only at a time or around the time the U.S. Wage Report (NFP) was published. They are attracted by the volatility of currencies – especially major pairs involving the US dollar – occurring at this time. Investors who rely on these and other financial news for their trading activities are called news traders. Many others, while perhaps using other trading methods necessarily include NFP in their trading calendars. Let’s find out why so many traders are interested in this report.
The NFP comes out once a month, usually on the first Friday at 8:30 a.m. New York time. Sometimes it will come out on the second Friday of the month, not the first, but always at the same time of day. The U.S. Department of Labor is responsible for compiling and publishing the report, which is kept secret until the official release date. The report provides data on unemployment in non-agricultural sectors of the US economy. By the way, other industrialized countries also publish some similarities of this kind of reports. Simply put, if the figures published in the NFP represent a serious revision of estimates made earlier, the market response is likely to be quite bright.
The reaction to expected NFP data from traders around the world, in terms of buying and selling, generally raises the price of the US dollar up or down. This usually happens the moment the report goes public. Sometimes the jump occurs early, that is, within a minute immediately preceding the exit at 8:30 p.m. Although less frequent, it has also been observed that the surge may occur up to 15 or 20 minutes after the report is released.
Other regular financial statements may also shift currency prices, but as a result they are not as constantly dramatic or dynamic as the NFP. Over the past few years, the range of price movements of the US dollar as a result of the NFP has typically ranged from 50 to 90 points in one general direction. Re-tracing, that is, moving the price back to the original price, often provides additional opportunities for trading. Many traders experience a profit of 5 to 20 percent from this one report alone.
Why does the NFP stand out for its ability to drive the market? The NFP is published by the United States government as an official statement of what the U.S. economy is doing. Based on the content of the report, the country’s health dimension is considered in terms of its employment. Many scholars and traders alike view the employment situation in the country as a major indicator of how things are going in this country economically. If the employment situation is bleak, so should its overall economy. A weak economy invariably means bad news for the currency of that particular country.
It should be recognized and appreciated that the US dollar has always aroused great interest among traders around the world. Known for its liquidity, relative stability, and support for the world’s largest economy (at least until China takes first place, as expected in 2026), the dollar is often accepted as payment for goods and services around the world. This is true even where it is not the official currency in a given jurisdiction. It is one of the relatively few currencies known as “hard currency” in the global financial sphere. He is always in the spotlight as a global player.
Recently, the US dollar has tended to weaken against other currencies. Certainly, global developments, including U.S. involvement in Iraq, Pakistan and Afghanistan, have contributed to some vague opinion about the value of the dollar. On the other hand, some see this as a good opportunity for American corporations, large and small, to export goods and services to other countries. This could lead to a rebound of the dollar in the long run.
Various strategies have been developed to take advantage of the rising market price trend during the NFP news release. As might be expected, some strategies work better than others. More and more vendors and programmers are developing and selling automated software to traders interested in the rapidly evolving NFP release environment. The cost of such software can range from a few hundred dollars to several thousand dollars. Of course, NFP can be traded manually successfully, as confirmed by many traders. 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 greatest regular and recurring trading opportunities in the FOREX market.