At the start of each trading session, you will receive an email with the author's new posts. 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. Trading technical chart patterns can be extremely profitable but one must always be aware of the fundamental story which is ultimately driving the markets. The decision they have to make is whether to leave rates unchanged, raise rates or lower rates and the outcome of this decision is extremely important to the currency of the economy and as such, to traders.
An increase in rates is generally seen as bullish for the currency meaning it will increase in value and a decrease in rates is generally bearish for the currency meaning it will decrease in value whilst an unchanged decision can be either bullish or bearish depending on the perception of the economy at the time.
This is also where monetary policy is announced, which concerns vital matters such as the implementation of QE, which we explain thoroughly in our Forex Mastercourse.
Some of the best trades you can make come from rate decisions, for example, since the ECB cut the EuroZone rate to 0. When GDP falls below market expectations, currency values tend to fall and when GDP outdoes expectations, currency values tend to rise. The index gives information about the historical average prices paid by consumers for a basket of market goods and highlights whether the same goods are costing more or less for consumers.
Central Banks monitor this release to help guide them in their rate and policy setting. If inflation is seen to be evident, and moving beyond a certain target then interest rate rises are used to counter this. Unemployment Rate The unemployment rate of a country is crucial to markets given its importance to Central Banks as an indicator of the health of an economy.
Higher employment leads to interest rate rises as Central Banks aim to balance inflation with growth and as such this figure draws huge market attention from traders. This figure is so important we do an NFP preview each month giving you our analysis on the release and how to trade it.
These Central Bank meetings are where we also learn about any changes in monetary policy, such as the announcement of quantitative easing. This is extremely important to currency traders and we explain this topic fully within our course. Since the ECB announced their latest QE program on Jan 22nd of this year, EURUSD has fallen by over pips The key thing with all economic indicators and news releases is not just what the actual release means but how the market anticipates the release and subsequently reacts to it, this is where the trading opportunities are created.
It can be extremely difficult for new traders seeking to trade news events as the volatility and uncertainty can be overwhelming, fortunately we have a fantastic suite of indicators which are perfect for trading news events.
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