News and Economic Data That Affect Forex Market Movements


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.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Education feed

Editors’ Picks

EUR/USD trades above 34-month lows after US retail sales miss

EUR/USD is trading around 1.0850, above the lowest since April 2017. The US Control Group disappointed by staying flat in January. Consumer sentiment beat expectations. Germany reported a 0% growth in Q4 2019. 

EUR/USD News

GBP/USD ticks down after reshuffle-related rally

GBP/USD is trading closer to 1.30, consolidating its gains after UK PM Johnson nominated Sunak as Chancellor instead of Javid, potentially directing fiscal stimulus. Brexit concerns and coronavirus developments are in play.

GBP/USD News

USD/JPY: Consolidated in a range, awaits US retail sales for fresh impetus

USD/JPY remains confined in a narrow range below 110.00 round-figure mark. The set-up warrants some caution before placing aggressive directional bets.

USD/JPY News

Editors’ Picks

EUR/USD trades above 34-month lows after US retail sales miss

EUR/USD is trading around 1.0850, above the lowest since April 2017. The US Control Group disappointed by staying flat in January. Consumer sentiment beat expectations. Germany reported a 0% growth in Q4 2019. 

EUR/USD News

GBP/USD ticks down after reshuffle-related rally

GBP/USD is trading closer to 1.30, consolidating its gains after UK PM Johnson nominated Sunak as Chancellor instead of Javid, potentially directing fiscal stimulus. Brexit concerns and coronavirus developments are in play.

GBP/USD News

USD/JPY: Consolidated in a range, awaits US retail sales for fresh impetus

USD/JPY remains confined in a narrow range below 110.00 round-figure mark. The set-up warrants some caution before placing aggressive directional bets.

USD/JPY News

US retail sales modestly higher in January, soft in the details

Consumers kept to their habits boosting purchases last month but the holiday season was slower than its initial reading giving the New Year a soft beginning.

Read more

Gold struggles to move into positive territory, trades around $1,575

The troy ounce of the precious metal rose $8 on Thursday but seems to be having a tough time stretching higher on Friday. As of writing, the XAU/USD pair was virtually unchanged on a daily basis at $1,576.

Gold News

RECOMMENDED LESSONS

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.

Strategy

Money Management

Psychology