5 Economic News Releases That Affect the Forex Markets

If you’re a currency trader, you need to keep up to date with economic news. Economic news releases impact the price of currency pairs. Some of the most popular economic releases include the Conference Board Leading Index, Housing Starts, and the Reserve Bank of Australia’s overnight cash rate. These releases affect currencies in different ways and can provide a good starting point for fundamental analysis. Here are 5 key releases to follow each day:

The US dollar, the euro, and the yen are the most common currencies. If they are the same currency, you’ll want to keep track of both of these currencies. Each country’s economic data can have a positive or negative impact on their currencies. Currency speculators are big players in the currency market. They make up over 90% of trading volume, and their strategies revolve around buying currency in the hopes that interest rates will rise. Meanwhile, commercial banks place capital in the strongest economies and have an optimistic outlook.

Global markets are in a state of flux, and there’s no shortage of economic news to keep up with. China’s economy remains affected by the pandemic, but it continues to grow more rapidly than analysts had anticipated in the first quarter of 2022. However, consumer spending and industrial production are both slowing down. Consumer spending and business activity has also slowed, and property and construction market activities have suffered sharply. In addition, retail sales declined in March.

The price of crude oil will have a huge impact on the national currencies of countries with large reserves. Unemployment rates in the European Union and the United Kingdom are expected to remain stable this year, which can be bullish for the EUR/GBP pair. Nonetheless, the ongoing war between Russia and Ukraine could cause the global economy to slow. It’s essential to understand the latest economic news, and keep an eye out for this. The market will react accordingly.

Financial TV networks offer round-the-clock coverage of the markets, providing daily updates on the biggest news. Institutional contacts of the big players will explain the current events to the public. A flat-screen 80-inch television in your bathroom can provide you with immediate access to the currency markets. Traders should always be prepared to react to rumors if they become true. If you’re unsure about rumors, develop a good trading plan.

It’s important to understand that the market reacts to economic news differently than it reacts to other news. A strong news release may trigger a sharp move in one currency pair or another. For example, the Euro/USD currency pair was in a tight trading range just 17 hours before its release. A release with this much time lag would have provided a great opportunity for breakout traders. In addition, the release of an economic report on an otherwise mediocre day could cause the dollar to lose 60-pip against the euro.

While there is a large risk of volatility during trading periods, even the smallest economic announcements can lead to sharp short-term volatility. Major trading announcements like changes in interest rates, unemployment data, or inflation news can throw even the most well-laid chart patterns out of whack. Therefore, it’s important to pay attention to the due dates of these events. If you trade before or after a news event, you may trigger your stop-loss. However, it’s best to wait until after the news event has passed to avoid unnecessary risk.

While the US Federal Reserve loosened monetary policy, other central banks in Asia/Pacific have remained on the opposite side. Despite the recent US Fed tightening, inflation in the Eurozone and Japan jumped over 7% in March. The rise in prices was due to war-related surges in energy prices. The news from China also contributed to the overall sagging global economy. This trend, however, is a temporary phenomenon that will likely subside.

While there are a variety of indicators that influence the price of currencies, one indicator that has the potential to move currencies is the Purchasing Managers Index (PMI). This index is based on a survey of key purchasing managers in an economy. Managers rate their business’s outlook, hiring plans, and workforce size. If the PMI is forecast to increase, this is good news for the currency in question. If it rises for two consecutive months, then the US dollar is likely to fall as well.