5 important Forex news events to watch out for

Posted On January 10, 2021January 18, 2021

If you are asked to name the biggest trait of Forex trading, what would you answer? The answer would be that the currency market is highly volatile due to the immense liquidity and price fluctuation. You may go to bed seeing a trend and wake up to see that the trade has changed to a different one. This is a pretty common scenario to see in this industry.

Many of you might wonder what causes such fluctuations? Since Forex deals with the value of one currency with another currency, the influence of the economic condition of countries plays huge roles in changing the price value. When there is a shortage in supply in contrast to demand, the value of a currency increases against the other currency in a currency pair. For example, in CHF/USD currency pair, if the demand for CHF increases then the value of CHF will increase and the exchange rate will go higher. So, if the previous exchange rate was 1.11 USD per swiss dollar then after an increase in demand, the exchange rate may go 1.21 USD per swiss dollar.

So, traders are always looking for speculating the market before they face any unpredicted situation. These speculations help traders to prepare beforehand and be ready to face any possible breakout in the trend. One of the best measures to make such speculations is to monitor the economic activities of a country. The value of currencies changes depending on the economic condition of a country. So, it is needless to say how much important are the economic news releases when it comes to making trades in the currency exchange market.

The budget

The budget is a detailed explanation of a country’s welfare and economic plans throughout a fiscal year. A government tends to invest in profitable sectors while minimising expenditure in non-profitable sectors. The budget is the indication of how efficient a government is and what are their policies regarding their economy. By observing a budget, one can presume the future condition of an economy. Whether an economy will rise or fall can be speculated from the budget. That’s why the budget is one of the most important news releases that move the market. If you intend to trade the options market like the pro UK trader, read more about the fiscal budget policy. Always remember, the budget of a country tells a lot about their economic progress.

GDP

Gross Domestic Product shows the growth in various sectors in the economy of a country. Each year the central bank releases the GDP of its economy which acts as an indicator of how much an economy moved. When the indicators are upward, it denotes that the economy is booming. While, if the indicators go downward, the economy tends to fall. Thus GDP can be used to know the forthcoming value changes in the Forex market.

Employment rate

This is one of the indicators which show the involvement of a population in a country’s economy. When the participation is more, it indicates that the financial condition and lifestyle of the people is improving. However, when the employment rate goes down, the economic condition also falls.

When the employment rate increases, people get more opportunities to invest and be self-dependent which is a good sign for an economy. And when the investment is more, the market becomes more dynamic and fluctuating.

CPI

Consumer Price Index is used to mark the highest price paid by the consumers and whether any good is costing more price or not. It mainly states the value of daily commodities used by people and if the price increases, there also increases the demand for money. And when the demand increases, value also increases.

Similarly, the value of a currency goes in the opposite direction when the price of daily commodities decreases in CPI.

FOMC meeting

It plays as the central role to set the price rates and give verdicts on current economic conditions. It also determines the effectiveness of an economy according to the monetary policy.

Elaborately known as America’s Federal Open Market Committee, it holds a meeting each to discuss the economic conditions and their evaluation plays important roles to provide clues to traders regarding the upcoming trends.

These indicators help traders to know what the market may look like and what could the most profitable point to enter a trade. All these indicators are subject to the news release and are fantastic clues for traders to speculate the trade market.