The value of a country’s currency is affected and largely influenced by various economic indicators that reflect how a country is performing. The macroeconomic events that take place internally and internationally are factors that will have a huge effect on the value of a currency.
As a forex trader you need to be constantly on top of these data – always ready to read and interpret reports as it is released. You should be able to do this quickly as well because the market immediately reacts to these economic indicators. I know of some forex traders who are on a long position but were caught flat-footed when negative economic data was released that resulted in the currency they were trading in to fall in value. Believe me, it’s not a good position to be in.
One of the most common questions asked by budding traders is what economic data to look out for. The question is understandable since there is a mountain of data that is released on a regular basis. But among forex traders the following indicators and reports are what they often follow. These are the ones that have a strong effect on currency value movements.
Employment data
Employment data is a strong economic indicator because it shows the level of unemployment in a country. As we all know a high unemployment rate can create a bigger strain on a country’s economy. Among the employment related data you need to follow are: Unemployment Rate, Unemployment Claims, Employment Change, Non-Farm Employment Change.
Economic data
The Trade Balance and the Gross Domestic Product (GDP) of the major economies and currency leaders are quite important and immediately have an impact on the value of a currency the moment it is released.
Other economic data that you should also monitor are those that are closely linked to indicating inflation, e.g., the Consumer Price Index (CPI) and the Producer Price Index (PPI).
Central Bank and Policy Makers
The biggest influencers of market movements are, of course, the announcements and policies made by a country’s central bank and the important monetary authorities. The most important data indicators are the interest rate announcements and monetary policy statements released by the country central banks, for example, the European Central Bank (ECB), Federal Reserve (Fed), and the Federal Open Market Committee (FOMC).
With so many economic data you need to be on top of, it can get confusing if you try to get information from different sources. The best option would be to visit sites dedicated to forex trading strategy. Most of these sites aggregate all of the relevant articles, policy statements and data that have an effect on the forex market. Aside from being a one-stop shop for forex information, most of these sites also feature data analysis and present you with good explanations as to why a recently released set of economic data will be good or bad for certain currencies.
Your favorite forex trading platform will often have its own news and analysis section as well. This is also a good source of information, and it’s also more convenient because you won’t need to visit different sites. It’s all there in one site.
As a forex trader you need to be constantly on top of these data – always ready to read and interpret reports as it is released. You should be able to do this quickly as well because the market immediately reacts to these economic indicators. I know of some forex traders who are on a long position but were caught flat-footed when negative economic data was released that resulted in the currency they were trading in to fall in value. Believe me, it’s not a good position to be in.
One of the most common questions asked by budding traders is what economic data to look out for. The question is understandable since there is a mountain of data that is released on a regular basis. But among forex traders the following indicators and reports are what they often follow. These are the ones that have a strong effect on currency value movements.
Employment data
Employment data is a strong economic indicator because it shows the level of unemployment in a country. As we all know a high unemployment rate can create a bigger strain on a country’s economy. Among the employment related data you need to follow are: Unemployment Rate, Unemployment Claims, Employment Change, Non-Farm Employment Change.
Economic data
The Trade Balance and the Gross Domestic Product (GDP) of the major economies and currency leaders are quite important and immediately have an impact on the value of a currency the moment it is released.
Other economic data that you should also monitor are those that are closely linked to indicating inflation, e.g., the Consumer Price Index (CPI) and the Producer Price Index (PPI).
Central Bank and Policy Makers
The biggest influencers of market movements are, of course, the announcements and policies made by a country’s central bank and the important monetary authorities. The most important data indicators are the interest rate announcements and monetary policy statements released by the country central banks, for example, the European Central Bank (ECB), Federal Reserve (Fed), and the Federal Open Market Committee (FOMC).
With so many economic data you need to be on top of, it can get confusing if you try to get information from different sources. The best option would be to visit sites dedicated to forex trading strategy. Most of these sites aggregate all of the relevant articles, policy statements and data that have an effect on the forex market. Aside from being a one-stop shop for forex information, most of these sites also feature data analysis and present you with good explanations as to why a recently released set of economic data will be good or bad for certain currencies.
Your favorite forex trading platform will often have its own news and analysis section as well. This is also a good source of information, and it’s also more convenient because you won’t need to visit different sites. It’s all there in one site.
Editors’ Picks
EUR/USD ticks higher to near 1.1800 ahead of flash German inflation data
The EUR/USD pair trades marginally higher to near 1.1810 in the late Asian trading session on Friday, ahead of the release of preliminary inflation data for February from Germany and its major states during the day.
GBP/USD struggles to lure buyers amid UK political drama, BoE easing bias
The GBP/USD pair struggles to build on the overnight modest bounce from the 1.3445 area, or the weekly low, and oscillates in a narrow band during the Asian session on Friday. Spot prices currently trade just below the 1.3500 psychological mark, nearly unchanged for the day, and seem vulnerable to slide further.
USD/JPY falls back below 156.00 as Tokyo CPI backs BoJ's hawkish outlook
USD/JPY attracts fresh sellers for the second straight day following the release of Tokyo CPI, which grew slightly more than expected in February. This comes on top of hawkish comments by BoJ officials and backs the case for further policy tightening, providing a modest lift to the Japanese Yen. Apart from this, sustained safe-haven buying, amid trade-related uncertainties and geopolitical tensions, benefits the JPY's safe-haven status. However, reduced Fed rate cut bets underpin the US Dollar and could help limit losses for the currency pair.
Editors’ Picks
EUR/USD ticks higher to near 1.1800 ahead of flash German inflation data
The EUR/USD pair trades marginally higher to near 1.1810 in the late Asian trading session on Friday, ahead of the release of preliminary inflation data for February from Germany and its major states during the day.
GBP/USD struggles to lure buyers amid UK political drama, BoE easing bias
The GBP/USD pair struggles to build on the overnight modest bounce from the 1.3445 area, or the weekly low, and oscillates in a narrow band during the Asian session on Friday. Spot prices currently trade just below the 1.3500 psychological mark, nearly unchanged for the day, and seem vulnerable to slide further.
Gold awaits acceptance above $5,200 and US PPI data
Gold consolidates previous rebound near $5,200 amid risk-off markets, awaiting US PPI release. The US Dollar eyes a flattish weekly close as dovish Fed outlook and tariff woes outweigh geopolitical risks. Gold yearns for acceptance above $5,200 to resume the uptrend, with a bullish RSI in play.
Bitcoin, Ethereum and Ripple consolidate with short-term cautious bullish bias
Bitcoin, Ethereum and Ripple are consolidating near key technical areas on Friday, showing mild signs of stabilization after recent volatility. BTC holds above $67,000 despite mild losses so far this week, while ETH hovers around $2,000 after a rejection near its upper consolidation boundary.
Changing the game: International implications of recent tariff developments
The Supreme Court ruling on International Emergency Economic Powers Act (IEEPA) tariffs provides limited relief for the rest of the world, with weighted average tariff rates modestly lower.
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