BinaryOptionsNow-The Non-Farm Payrolls report is a publication released by the U.S. Bureau of Labor of Statistics on the first Friday of every new month. The report points out the change in the US labor force. It’s called “Non-Farm Payroll report” because it does not takes in consideration jobs in the farming sector as well as in government, and non-profit organizations.
The NFP report is one of the most important indicators that reflect the health of the United States economy. The report is responsible for a lot of fluctuations in the market and as such it’s used by a lot of traders as a tool to predict the movement of various markets and asset prices.
For this reason the monthly Non-Farm Payroll report is used by many binary options traders to develop long term strategies for the month but also to take quick decisions that could generate a lot of profits. There are basically two ways in which traders can trade the NFP which are trading on it directly and trading on markets that are expected to be influenced by the release of the report.
Trading the NFP Directly
Certain binary options brokers allow traders to trade directly on the Non-Farm Payroll report. In this case, traders will have the possibility to predict the development of the NFP during the month.
For example if during the last month the NFP increased with 100,000 and the trader believes that this trend will continue, then he or she will have the possibility to bet on the fact that the current month’s numbers (that will be released next month in the following report) will show a larger increase than 100,000.
If that will indeed be the case then the trader will win his or her bet. The great advantage of binary options contracts purchased on the NFP is that their outcome can be predicted with considerable accuracy if during the month the trader carefully follows the development of the market.
Trading on Markets and Assets Influenced by the Non-Farm Payrolls
A lot of markets and assets are influenced by the Non-Farm Payroll data released each month. For example, in case the past month’s NFP report shows that the number of jobs increased substantially then it’s expected that more money will end up in the hands of citizens and as such the sales – and implicitly the stock prices – of certain companies might increase in the future. As such, binary options bets placed on the stock prices of certain companies may be predicted with greater accuracy.
The Non-Farm Payroll report almost certainly always influences the exchange rate of major currency pairs as well. This offers a great opportunity for options traders to trade on various forex options involving the US Dollar and other mainstream currencies such as GBP, JPY and EUR.
For example, if the newest report shows a sharp increase in new jobs then it means that the economy is catching up. This might determine a lot of foreign investors to come to the US and invest large sums into local businesses. This will further drive the economy and strengthen the USD against other currencies such as the Euro of GBP.
January Non-Farm Payrolls Report
The latest Non-Farm Payroll report was released on January 4th and reflects on the changes taken place during the month of December 2012. The data indicates an increase of 155,000 Non-Farm Payrolls which is consistent with industry forecasts.
Experts believe that this increase will be maintained during this month as well. However, experts also warn that this increase might be a bit slower compared to those of previous months, so the February report is not guaranteed to reach the 155,000 mark.