Trading news has become enormously popular among Forex traders. The opportunities and opportunities to earn big money, just by observing them, have made them unavoidable for the traders. But not all news has the same impact on the industry. Some news affects the global business slightly whereas other news affect it tremendously.
Out of hundreds and thousands of news releases only a few of the demand traders’ attention. As a trader, you need to select a currency pair first and then find out which bits of news affect the market in term of your selected currency pair.
Common forex news that should be followed
Here are some the common news types which impact the whole trading market in general.
GDP growth rate
GDP or the Gross Domestic Production rate has tremendous control over the Forex business. You can get an overall picture of a country’s economy just by analyzing its past and current GDP report. A fair growth in GDP rate indicates a strong position for a currency. If one of your chosen currency pair is USD, observing the GDP growth of America will determine your next course of action.
Suppose you are trading with the GBP/USD pair. Now if the GDP growth in UK is higher than that of USA then it depicts a bullish movement and if the GDP of USA gets higher position then it is called a bearish movement. If you study the online options trading business, these correlations will be much clear.
CPI or Consumer Price Index
The CPI shows the inflation condition in a country’s economy in a year. The impact of inflation on exchange market is disastrous. Though this effect is so massive that anybody can notice it, a basic enlightenment will be of great help in serious cases.
A certain level of inflation is a primary sign of a good economic state. But you must be scrupulous about the slightest change of a country’s inflation rate of the quote currency of your chosen pair.
A forecast showing a growth in the CPI index demonstrates a bullish movement. The opposite hint will be bearish.
This is one of the most crucial pieces of news a trader must have an eye on. Whether a country’s unemployment rate is high or low, it pinpoints the country’s current and future scope for development.
Major economies publish respective unemployment state on a monthly and yearly basis. The standard unemployment rate for most countries is about 4.0%. The higher this percentage goes for a county, the lesser the value its currency holds.
A higher unemployment growth rate specifies a bullish movement and a lower rate specifies a bearish course.
Retail issues are usually published monthly. Retail news is highly important for traders as it marks a country’s given job security, expenditure of its inhabitant’s on non-durable and durable products. All above, an erudite pair of eyes can have signals for the future GDP growth by inspecting ongoing retail movements.
Retail sales evaluation gets tricky since it depends on an economy’s whole productivity level and the wage growth. If your base currency’s country has retail sales growing and the quote currency’s country remain stagnant in retail sales, the state is clearly a bullish movement.
Interest rate (overnight)
Banks are borrowing money from each other on overnight basis. Central banks of powerful countries try to lend money at their overnight rate so that they can have an influence over the market.
The overnight interest rate determines the swap rate and market state. As this rate changes frequently, so do the other aspects of the market which are depended on the interest rate. So being alert and observing this interest rates change is crucial.
Such sectors of which a trader must be aware of is large in number. This article has discussed only the most important ones. A trader must explore other areas as well. The deeper and larger area you will cover, the clearer picture you will have of the market and so you will be better able to make good decisions.
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