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UAE Presidents Foreign Policy Advisor: The UAE is exercising restraint and seeking a way out for Iran and the region.The UAE presidents foreign policy advisor said Irans accusations against the UAE are "part of its unwise and chaotic policy."On March 15, S&P Global Ratings affirmed Saudi Arabias sovereign credit rating, adding that despite disruptions, non-oil growth momentum and related non-oil revenues should help support the economy. S&P stated that Saudi Arabia should be able to withstand the impact of the current conflict with Iran. S&P noted that the country should be able to shift oil exports to the Red Sea, utilize its vast oil storage capacity, and increase oil production post-conflict. The Saudi government should also be able to adjust investment spending related to "Vision 2030," a strategic framework launched by the country in 2016.On March 15th, Matt Reed, Vice President of the geopolitical and energy consultancy Foreign Reports, stated that an attack on Kharg Island could trigger Iranian retaliation against Gulf oil-producing countries. He said, "Iran will retaliate in kind." The United States warned on Friday that if Iran continues to block the Strait of Hormuz, Kharg Islands oil facilities could become the next target. Reed warned that the longer the conflict continues, the harder it will be to find alternative energy supplies. "At least 10 million barrels of oil are trapped in the Gulf every day, plus more than 4 million barrels of refined petroleum products and tens of billions of cubic feet of liquefied natural gas, with no easy alternatives." The International Energy Agency has announced the largest emergency oil reserve release in history, with 32 member countries planning to release approximately 400 million barrels of oil. However, Reed believes this measure will have limited effect, stating, "By the time the oil gets to the market, it may be too little, too late." He described it as nothing more than a "band-aid."On March 15th, local time, the Iranian Islamic Revolutionary Guard Corps issued a statement saying that in the past 48 hours, the US and Israel had launched attacks on several civilian industrial facilities in Iran, resulting in the deaths of several workers. The statement said that after setbacks in its confrontation with Iran, the US and Israel have turned to attacking non-military industrial facilities. Iran warned that US companies in the region should withdraw from their facilities and urged nearby residents to stay away from industrial areas with US capital involvement to avoid potential attacks.

NFP and Forex: What is NFP and How Does It Work?

Larissa Barlow

Mar 25, 2022 14:57

Nfp And Forex Trading: Key Points of Discussion 

  • The announcement of Non-Farm Payrolls (NFP) creates volatility in the FX market.

  • The NFP calculates the net change in employment jobs.

  • Forex traders utilize an economic calendar to anticipate the publication of the NFP.

  • What is a non-governmental organization (nfp)?

 

Non-farm payrolls (NFP) are a critical economic indicator for the US economy. It is the amount of new employment created, excluding agricultural workers, government employees, private home employees, and nonprofit organization employees.

 

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In general, NFP announcements produce significant volatility in the FX market. Typically, the NFP data is provided on the first Friday of each month at 8:30 a.m. ET. This article will discuss the importance of non-farm payrolls in economics and how to use them into a forex trading strategy.

 

What Effect Does The NFP Have On Forex?

 

NFP data is significant since it is issued monthly, giving it an excellent predictor of the economy's present status. The Bureau of Labor Statistics releases the statistics, and the next release may be found on an economic calendar.

 

The Federal Reserve Bank views employment as a critical indicator. When unemployment is elevated, policymakers frequently pursue an expansionary monetary policy (stimulatory, with low interest rates). An expansionary monetary policy seeks to boost economic production and employment.

 

Thus, if the unemployment rate is greater than usual, policymakers will attempt to stimulate the economy. Stimulatory monetary policy means lowering interest rates and decreasing demand for the Dollar (money flows out of a low yielding currency). To understand how this works in detail, please read our article on how interest rates affect FX.

 

The chart below illustrates how volatile FX can be following the announcement of the NFP. The projected NFP result for March 8, 2019 was 180k (job additions), however the actual result was only 20k. As a result, the value of the Dollar Index (DXY) decreased and volatility rose.

 

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Forex traders must exercise caution when it comes to data releases such as the NFP. Traders may be stopped out as a result of the abrupt surge in volatility. Spreads rise in lockstep with volatility, and larger spreads might result in margin calls.

Which Currency Pairs Are Affected the Most by the NFP

Because the NFP data is a leading predictor of American employment, it has the greatest impact on currency pairs that contain the US Dollar (EUR/USD, USD/JPY, GBP/USD, AUD/USD, and USD/CHF, among others).

 

Other currency pairings also see an uptick in volatility following the release of the NFP, and traders must be mindful of this risk of being stopped out. The chart below illustrates the CAD/JPY exchange rate during the publication of the NFP data. As you can see, even if a trader is not trading a currency pair tied to the US Dollar, a rise in volatility might force a trader out of their position.

 

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Dates for the Release of Non-Farm Payroll

NFP figures are typically released by the Bureau of Labor Statistics on the first Friday of each month at 8:30 a.m. ET. On the Bureau of Labor Statistics' website, you may see the release dates.

 

We propose adopting a pull-back strategy rather than a breakthrough approach because to the volatility nature of the NFP announcement. Before entering a trade using a pullback technique, traders should wait for the currency pair to retrace.

 

Using the same scenario as earlier (NFP findings of 20,000 vs. 180,000 predicted), we anticipate a depreciation of the US Dollar. In the example below, we will use the EUR/USD currency pair. We predict the EUR/USD will rise as a result of the worse-than-expected NFP report.

 

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Trading Nfp Data Releases: Best Practices & Additional Reading

The following are some pointers to keep in mind while utilizing NFP data releases to guide your forex trading:

 

  1. Each month, the NFP data is provided on the first Friday.

  2. Increased volatility and widening spreads are accompanying the announcement of the NFP data.

  3. Currency pairings that are not tied to the US Dollar may also see greater volatility and spread widening.

  4. Trading the NFP data release can be risky owing to increased volatility and potential spread widening. To avoid being stopped out, we recommend applying the right leverage, or none at all.

 

Other significant data releases to keep an eye on include the following:

 

While the NFP often influences the market, other major data releases include the CPI (inflation), Fed funds rates, and GDP growth.

 

If you're interested in learning more about trading the news and data releases, check out our beginner's guide to trading the news. Additionally, we recommend reading our tutorial on the characteristics of great traders to avoid the number one error traders make while trading forex.

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