You can always find economic news. In today’s fast pace of life, you would surely find any news about economy interesting and beneficial. You can even get information on economic forecasts. All these come from different media sources like newspapers, magazines, radio, TV, Internet and so on.
You can also learn how to read economic calendar. It provides you glance into current economic fundamentals. They directly affect currency prices. Market reactions during economic news can be violent too. Therefore, know what are possibilities, and what are risks involved in those situations.
You may have heard about forecasting the forecast, but it is important to understand that such information has great significance only when it comes to actual data. Most often, economic news items are released just before currency rates move. Then there is the release of GDP figures for the first quarter. The data of the previous months is studied by forex traders to predict the upcoming rates. It is a very useful source of information especially for new investors.
A lot depends on currency trade. The price movements of currency dictate what the economic calendar is like. Traders study the economic calendar closely in order to know which currency pair should be sold or bought. Usually, traders look at the economic calendar to predict the movement of the dollar.
Experts say that it is important for forex trader to take notice of the economic news that influences the rate for a particular currency pair. Determining which data releases should be watched is quite difficult because the data for different countries vary. For instance, the U.S. dollar moves much more against many other currencies than against any other currency.
There are some trends that are generally followed by forex traders but there are no steadfast rules. As for the relation between U.S. Federal Reserve rate decision and interest rate decisions, it is hard to say. But whatever the experts say, it is always good to have a general idea about the interest rate decisions, both in terms of direct impact and indirect impact on trade balance.
Economic news releases usually mention two major factors that influence rate moves. One is ADRs (annualized default rates), another is the FOMC (Federal Open Market Committee) rate decision. These two factors together will determine exchange rate moves. So, you should pay attention to both an a.m. and a.d.c.
Economic news can be released in two ways: in news letters and in a news release. In news letters, the authors of the news release provides an outline of the topic of the news release, the short-term objectives for the economy, and a detail column that explain in detail the methodology of their analysis. News letters, however, are not as widely distributed as releases.
A news release can be released by central banks, private companies, or by both. The data release, which includes the economic data release along with commentaries and explanations, is distributed to traders around the world by email. You need to have your own forex trading strategy in order to effectively manage news related to your trading strategy.
The second type of news you need to be aware of is the fundamental analysis. Fundamental analysis, as opposed to technical or economic indicators, deals with the overall health of the market. This is why it is often referred to as the long-term economic view. This is an important aspect of your forex trading strategy because fundamental analysis is essentially used to forecast where the market will go over the long term. If the fundamental analysis leads to a prediction for the market direction, you should take that into consideration. Otherwise, you may not be ready to make the big moves associated with turning a profit.
Economic news releases can have a significant impact on currency pairs including the USD/JPY (the Japanese Yen), EUR/GBP (the British Pound), and GBP/USD (the Australian Dollar). These are the most widely traded currencies in the world and they follow a very specific economic calendar. When you are analyzing economic news releases for your forex trading strategy, you should pay special attention to whether or not the economic calendar for the given country is following the same calendar year as the release. If it is, then this is a good sign, indicating that the economic news will have a positive effect on that particular currency.
On the flip side, if the economic releases are pointing to a downward trend, it’s probably best to move away from those particular currencies. It’s important to remember that forex traders look not only at the short term but also at the long term. If a country is taking a hit in economic terms, it could easily bounce back later. That’s why many investors, when they make their moves, do so temporarily, only to quickly move again once the situation improves. By the same token, if a country is doing well, it usually doesn’t take much to boost its currency, especially if it’s a major economic power. As such, the timing of these economic releases is critical to your forex strategy.