What Is the NFP Report?
The NFP measures the change in the number of employed people during the previous month, excluding farm workers, private household employees, and workers in non-profit organizations. By focusing on non-agricultural employment, the report captures the core strength of the U.S. economy.
Alongside job creation, the NFP release also includes:
- Unemployment rate – the percentage of the labor force without jobs.
- Average hourly earnings – a measure of wage inflation.
- Labor force participation rate – how many people are actively engaged in work or job-seeking.
Together, these metrics provide a broader view of U.S. economic conditions.
When Is It Released?
The NFP is released on the first Friday of every month at 8:30 AM EST. This timing is critical because it sets the tone for trading sessions in New York, London, and beyond.
Why Is NFP Important?
Markets care deeply about the NFP because employment drives consumer spending, which accounts for nearly 70% of U.S. GDP. Strong payroll growth typically suggests economic expansion, while weak growth can point to slowdowns or even recessions.
The Federal Reserve also considers the NFP data when setting monetary policy. For example:
- A strong report may push the Fed toward tightening (raising interest rates).
- A weak report may encourage easing (lower rates or maintaining dovish policy).
Thus, NFP data is often a catalyst for volatility across multiple asset classes.
Market Impact: EUR/USD, Gold, and Oil
The NFP release usually sparks immediate market reactions. The most affected assets tend to be:
- EUR/USD (Foreign Exchange)
- The U.S. dollar is most directly impacted. A better-than-expected NFP usually strengthens the dollar, causing EUR/USD to fall. Conversely, weaker numbers often weaken the dollar, pushing EUR/USD higher.
- Statistically, EUR/USD often sees the largest intraday volatility spikes within the first 30 minutes after the release.
- Gold (Commodities)
- Gold, priced in U.S. dollars, tends to move inversely with the dollar. A strong labor market (and thus stronger dollar) usually pressures gold lower. Weak data, however, may support gold as investors anticipate lower interest rates.
- In recent years, gold has shown a higher correlation to NFP surprises than oil, making it a more direct play on the release.
- Oil (Energy Markets)
- Oil prices are influenced more by supply-demand fundamentals, OPEC policy, and geopolitical risks. While the NFP can affect oil through the U.S. dollar channel, its impact is generally less pronounced compared to EUR/USD and gold.
Historical Statistics & Volatility
- According to several market studies, the average EUR/USD move after an NFP release is between 50–100 pips in the first hour.
- Gold often swings $15–$30 per ounce in the immediate aftermath.
- Oil tends to show smaller, secondary moves, unless the report strongly shifts expectations for U.S. economic growth.
Conclusion
The Non-Farm Payroll report remains a cornerstone of economic analysis and trading strategies. Released monthly, it offers insights into U.S. labor market health, influences Federal Reserve policy, and acts as a powerful volatility trigger for global markets.
While all asset classes react, EUR/USD and gold are typically the most sensitive, with oil reacting indirectly. Traders and investors worldwide mark the first Friday of every month on their calendars, knowing that the NFP can set the stage for global market direction in the weeks ahead.
