Recently, I keep seeing you ask about NFP and why every time this data is released, the market tends to shake. Actually, NFP is an abbreviation for Non-farm payrolls—meaning data on the number of jobs outside the agricultural sector in the U.S.—and it’s more important than you might think.

The interesting part here is that NFP doesn’t just show how many people are being hired; it also reflects the overall health of the U.S. economy. When the number increases, it means the labor market is doing well and the economy is growing. Conversely, if it falls, you can take it as a warning that a recession may be coming.

I usually pay attention to two types of data. First is the official NFP data from the U.S. Bureau of Labor Statistics, released on the first Friday of each month at 8:30 or 9:30 a.m. EST. Second is the ADP report (also called “small non-farm payrolls” data), released on the first Wednesday of each month. This ADP report is collected from more than 500,000 companies, so it’s also fairly reliable as an early signal before the official data comes out.

Why is “NFP” (an abbreviation for what) noticed so much? Because it’s directly linked to the Federal Reserve’s interest-rate decisions. If NFP is strong, the Fed may raise interest rates. If it’s weak, they may consider cutting rates. And any move by the Fed creates ripples across the entire global financial market.

I’ve noticed that when NFP comes in above expectations, the stock market often jumps sharply. Investors believe the economy is healthy and companies will have strong profits, so they buy stocks. Similarly, the U.S. dollar also rises because investors want to hold the currency of a country with a strong economy.

But NFP (Non-farm payrolls) also has a drawback. This data only includes people working in non-agricultural industries—it does not count farmers, government employees, the self-employed, or employees at non-profit organizations. So it’s not a complete picture of the labor market.

When reading NFP data, I usually don’t just look at the absolute number; I also compare it with the market’s expectations. If the actual figure is higher than the forecast, that’s a positive signal. If it’s lower, the market may start to worry. In addition, I also follow the 12-month trend rather than focusing only on a single month.

The cryptocurrency market is also indirectly affected. When NFP is strong, investors often prioritize safer assets, which causes Bitcoin and other digital currencies to fall. But if NFP is weak and people are concerned about the economy, they may move into crypto to look for higher-return opportunities.

The purpose of tracking NFP—this important index—is so you can predict the direction the market may move. It’s not a secret formula, but it’s a powerful tool if you know how to use it. Keep in mind that there are always other factors affecting the market, so combine NFP analysis with other indicators such as CPI, GDP, and geopolitical conditions for a more comprehensive view.