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 climbs to daily highs near 1.1820
EUR/USD now picks up pace and advances to the area of daily peaks north of the 1.1800 barrier at the end of the week. The pair’s decent move higher comes against the backdrop of a generalised lack of direction in the FX galaxy and the mild offered stance in the US Dollar.
GBP/USD trims losses, retests 1.3460
After briefly challenging its key 200-day SMA near 1.3440, GBP/USD now manages to regain some balance and revisit the 1.3460 zone on Friday. Cable’s pullback comes as the selling pressure on the Greenback gathers traction, reigniting some recovery in the risk-linked space.
Japanese Yen gives back half of early gains against USD ahead of US PPI data
The Japanese Yen (JPY) surrenders half of its early gains against the US Dollar (USD) during the European trading session on Friday. The USD/JPY pair rebounds to near 155.90 as the JPY falls back, but is still 0.15% down.
Editors’ Picks
EUR/USD: Fed calm, ECB steady, but the Dollar still leads Premium
EUR/USD is still struggling to find real traction. The pair has tried to stabilise, but momentum keeps fading, leaving the door open to further weakness.
Gold: Falling US yields, geopolitics help XAU/USD hold ground Premium
Gold (XAU/USD) gained traction and climbed above $5,200, ending the fourth consecutive week in positive territory. The next round of US-Iran talks and crucial macroeconomic data releases from the US will be watched closely by market participants in the short term.
GBP/USD: Will Pound Sterling defend key 1.3450 support ahead of US jobs data? Premium
The Pound Sterling (GBP) entered a bearish consolidation phase against the US Dollar (USD), after having tested critical support near the 1.3450 level on several occasions.
Bitcoin: Another month of losses, and it’s been five
Bitcoin (BTC) price is stabilizing around $68,000 at the time of writing on Friday, but the Crypto King is poised to close February on a fragile footing, marking its fifth consecutive month of losses since October and a rare start to the year with back-to-back monthly corrections.
US Dollar: At a crossroads; Fed steady, tariffs in flux Premium
The US Dollar’s (USD) upward momentum from the previous week seems to have encountered a tough nut to crack in the 98.00 region, as measured by the US Dollar Index (DXY).
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
I’m often mystified in my educational forex articles why so many traders struggle to make consistent money out of forex trading. The answer has more to do with what they don’t know than what they do know. After working in investment banks for 20 years many of which were as a Chief trader its second knowledge how to extract cash out of the market.
5 Forex News Events You Need To Know
In the fast moving world of currency markets where huge moves can seemingly come from nowhere, it is extremely important for new traders to learn about the various economic indicators and forex news events and releases that shape the markets. Indeed, quickly getting a handle on which data to look out for, what it means, and how to trade it can see new traders quickly become far more profitable and sets up the road to long term success.
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and selling pressure. Chart patterns have a proven track-record, and traders use them to identify continuation or reversal signals, to open positions and identify price targets.
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.
The challenge: Timing the market and trader psychology
Successful trading often comes down to timing – entering and exiting trades at the right moments. Yet timing the market is notoriously difficult, largely because human psychology can derail even the best plans. Two powerful emotions in particular – fear and greed – tend to drive trading decisions off course.