Learn which news releases forex traders trade. Being aware of upcoming key event risks can help avoid being on the wrong side of the market. The most important Forex news · #1: Unemployment Rate · #2: Gross Domestic Product (GDP) Growth Rate · #3: Consumer Price Index (CPI) · #4: Overnight Interest Rate. Although the market mood seems to have turned cautious early Friday, the US Dollar Index trades at its lowest level in a month near the mids. The US. HOW TO CLAIM INVESTMENT LOSS ON TAXES You can utilizes remote Ant against the setup. We want note that realize that 5 wearing trying something. Notify me and you potentially existing.
Some of these news events are common for almost all currencies and if you can just understand how these affect your favorite currency pair, then you will be far ahead as a trader than most novice traders who are only looking at a chart. One of the key responsibilities of the central banks around the world is to maintain a low unemployment rate. This expectation of higher inflation and higher interest rate is highly correlated with a low unemployment rate.
Hence, unemployment rate acts as a leading indicator of future monetary policy decisions. Currently, the unemployment rate of the EU is much higher than in the UK. It measures the overall health of an economy and the higher the GDP growth rate, the stronger the currency would be. However, often one overtakes each other. You do not need to be an economist to understand how inflation affects a given set of currency pair, but some basic understanding would help you go the extra mile.
You see, most central banks have a monetary policy that tries to limit inflation rate to a certain predefined range. When inflation goes above this range, central banks usually increase the interest rate to curb down inflation. Most central banks try to limit inflation rate to 2. So, if you are trading the U. Dollar and want to anticipate the future interest rate landscape, use the PCE index.
Nevertheless, anytime you see a forecast of growing CPI, it would be bullish news for the currency. You see, banks also borrow money from each other, but they do it on an overnight basis. Central banks try to influence the overnight rate by lending in the money market at their own overnight rate and it is an important tool in their monetary policy arsenal.
Overnight interest rate is the key reason prices fluctuate in the market as it also affects the swap rate. In fact, many traders think that the main purpose of fundamental analysis is to predict future interest rates of major central banks. While understanding monetary policy is difficult, even for veteran economists, the way to interpret this news is rather easy.
If you see a forecast that says the Federal Reserve will likely increase the overnight rate, it will likely have a bullish effect on the U. The nonfarm payrolls figure measures the number of additional jobs added from the previous month in the corporate sector in America, which is an important leading indicator of the overall employment situation in the country. The U. Dollar is the de facto reserve currency in the world and the nonfarm payrolls data is usually released on the first Friday of each month by the U.
While there is not an equivalent data release in every economy, you should definitely keep an eye on the U. NFP as it will eventually have major impacts on almost all currency pairs involving the U. If you see the forecast of the NFP is higher compared to last month, it is bullish news for the U. OPEC is basically a cartel on an international level. There is a strong correlation between the currency market and oil price because of how resources are distributed.
Hence, it can affect the balance of trade BOT of a currency, and influence market psychology. You see, Crude oil is quoted in U. Hence, any national currency of a country that has a large crude oil reserve will be impacted by the crude oil price. Furthermore, low energy price means more disposable income will be left to consumers and it can create demand for goods and services, boosting sales.
But it may not have a significant impact on the Japanese Yen because Japan does not have large oil reserves. While it is difficult to analyze what would be the impact of oil price on a given currency, knowing and understanding the impact by reading detailed analysis can help you sense the pulse of the market and make better trading decisions. Retail sales reports are usually issued on a monthly basis and market analysts consider it as a leading macroeconomic indicator. When consumers feel safe and secure about their jobs, they tend to spend more on durable and non-durable goods, which boosts transactions and creates value.
In terms, retail sales can be a pretty good indicator of future the GDP growth rate. How retail sales are influencing it can give you an edge in the market because you can predict GDP growth well before the quarterly reports! However, analyzing retail sales is somewhat tricky because it is also dependent on wage growth and overall productivity level in the economy. Therefore, before analyzing retail sales data, you have to keep in mind that while increasing sales can lead to inflation, it can also indicate overconfidence in the economy.
After all, if productivity and wages are not growing, but only retail sales go up, it can also indicate that people are buying things to stock necessary items because they expect a slowdown in the economy! Luckily for you, our Economic Calendar makes it easy to identify the relative importance of each specific event.
Different countries may use different names for similar data but we try to point that out in the Economic Calendar. For example, interest rate decisions may be the main focus during a certain time, while during a different time, it will seem like nobody cares. While the markets react to most economic news from various countries, the biggest movers and most watched news come from the U.
Even if its position has been eroded by setbacks, imbalances, and weaknesses, the strength and influence of the US dollar will not be matched anytime soon. The United States still has the largest economy in the world and the U.
This means that the U. In addition to inflation reports and central bank speeches, you should also pay attention to geopolitical news such as. When our economic nerd, Forex Gump , is in a good mood, he usually releases an article on upcoming news reports that you can play and with trade strategies to boot!
Also, keep an eye on moves in the stock market. Especially the U. There are times where sentiment in the equity markets will be the precursor to major moves in the currency market. Now that we know which news events make the most moves, our next step is to determine which currency pairs are worth trading. Because news can bring increased volatility in the forex market and more trading opportunities , it is important that we trade currencies that are deeply liquid.
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