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.

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Editors’ Picks

EUR/USD edges lower toward 1.0850 ahead of mid-tier data

EUR/USD edges lower toward 1.0850 ahead of mid-tier data

EUR/USD edges slightly lower toward the 1.0850 area in the early European session on Monday as the cautious market mood helps the US Dollar hold its ground. Markets await business and consumer sentiment data from the Euro area and German growth figures.

EUR/USD News

GBP/USD stays on the back foot below 1.2400

GBP/USD stays on the back foot below 1.2400

GBP/USD came under modest bearish pressure and dropped below 1.2400 at the beginning of the week. The negative shift witnessed in risk mood helps the US Dollar find demand as a safe haven and makes it difficult for the pair to gain traction.

GBP/USD News

USD/JPY flat-lines above mid-129.00s, remains confined in a one-week-old trading range

USD/JPY flat-lines above mid-129.00s, remains confined in a one-week-old trading range

USD/JPY struggles to gain any meaningful traction and seesaws between tepid gains/minor losses. A softer risk tone benefits the safe-haven JPY and exerts pressure amid a modest USD weakness. Dovish-sounding comments by the BoJ Governor help limit any meaningful downside for the pair.

USD/JPY News

Editors’ Picks

EUR/USD edges lower toward 1.0850 ahead of mid-tier data

EUR/USD edges lower toward 1.0850 ahead of mid-tier data

EUR/USD edges slightly lower toward the 1.0850 area in the early European session on Monday as the cautious market mood helps the US Dollar hold its ground. Markets await business and consumer sentiment data from the Euro area and German growth figures.

EUR/USD News

GBP/USD stays on the back foot below 1.2400

GBP/USD stays on the back foot below 1.2400

GBP/USD came under modest bearish pressure and dropped below 1.2400 at the beginning of the week. The negative shift witnessed in risk mood helps the US Dollar find demand as a safe haven and makes it difficult for the pair to gain traction.

GBP/USD News

Gold shows resilience below 200-hour SMA, bulls have the upper hand

Gold shows resilience below 200-hour SMA, bulls have the upper hand

Gold price kicks off the new week on a subdued note and oscillates in a narrow trading band through the Asian session. The XAU/USD remains well within the striking distance of a nine-month peak touched last Thursday.

Gold News

Why Ethereum bears need to be cautious about shorting ETH before $2,000

Why Ethereum bears need to be cautious about shorting ETH before $2,000

Ethereum price has been consolidating after the January rally subsided after three weeks. This tightening continues even after BTC shot up 3% over the weekend. Therefore, a short-term spike in buying pressure should is likely. 

Read more

Big risk this week Fed hikes 50 points

Big risk this week Fed hikes 50 points

While the entire global investment community is apparently very excited about the US Fed slowing its rate increases to 25 bps, there are strong reasons for arguing why another 50 bps rate hike, or two, are still on the menu.

Read more

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