5 Forex News Events You Should Be Aware Of

 

Forex News Events any Forex trader Should Be Aware Of.

In the fast-paced world of currency markets, where enormous changes may appear out of nowhere, it is important for rookie traders to learn the numerous economic indicators and forex news events and releases that impact the markets.

 Indeed, rapidly figuring out which data to look for, what it means, and how to trade it may help inexperienced traders become significantly more lucrative and put them up for long-term success.

Trading technical chart patterns may be quite successful, but one must constantly be mindful of the underlying narrative driving the markets. We have compiled a list of five of the most important News Releases/Economic Indicators you should be aware of right now!

The 5 Most Important Market News Events

1.The Central Bank's Interest Rate Decision

Every month, the different Central Banks of the world's economies convene to determine the interest rates for which they are accountable. The decision they must make is whether to keep rates steady, increase rates, or cut rates, and the outcome of this decision is important to the economy's currency and, as a result, to traders.

An increase in rates is generally seen as bullish for the currency (meaning it will increase in value), whereas a decrease in rates is generally seen as bearish for the currency (meaning it will decrease in value), whereas an unchanged decision can be either bullish or bearish depending on the perception of the economy at the time.

Also Read: Tips and Tricks On News Trading

While the actual decision is crucial, so is the accompanying policy statement, in which the Central Bank provides a summary of the economy and its prediction for the future. This is also where monetary policy is published, which includes important issues such as the adoption of QE.

Quantitative easing (QE) is a kind of unconventional monetary policy in which a central bank buys longer-term assets on the open market to boost the money supply and promote lending and investment. Instead, a central bank may acquire certain quantities of assets.

Rate choices may make to some of the finest trades. For example, after the ECB dropped the Euro Zone rate to 0.05 percent in September 2014, the EURUSD has fallen by nearly 2000 pips.

2. GDP

The Gross Domestic Product (GDP) is an important indication of a country's economic health. Each year, a nation's central bank issues growth forecasts that determine how quickly the country should expand, as measured by GDP.

When GDP falls short of market expectations, currency values fall; when GDP exceeds expectations, currency values increase. As a result, currency traders closely monitor the release of this figure, which may be used to carefully predict Central Bank decisions.

When Japan's GDP unexpectedly declined by 1.6 percent in November 2014, the JPY plummeted substantially versus the USD as traders braced for further Central Bank action.

3.Consumer Price Index (Inflation Data)

Among the different economic indicators, the Consumer Price Index is the most generally used inflation gauge. The index provides information on the historical average prices paid by consumers for a basket of market items, highlighting whether the same commodities cost consumers more or less.

This release is closely watched by central banks in order to assist them establish interest rates and policies. If inflation is deemed to be visible and rising over a specific rate, interest rates are raised to counteract this.

Also Read: How To Enhancing Your Forex Trading Experience

In November 2014, Canadian CPI came in at 2.3 percent, above market estimates of 2.2 percent, and the Canadian Dollar immediately traded up to a six-year high versus the Japanese Yen.

4.Rate of rate

The unemployment rate of a country is crucial to markets due to its importance to Central Banks as a measure of an economy's health. Higher employment leads to higher interest rates as central banks strive to balance inflation and growth, and as a rate, this figure garners a lot of market attention from traders.

Along with the unemployment rate, the two most important labour statistics in the United States are the ADP and NFP data issued each month, with the NFP gaining precedence. Because this figure is so important, we provide an NFP preview each month, in which we provide our analysis of the release and how to trade it. Given the market's current importance on the probable timing of a Fed rate rise, this figure is becoming more important by the month.

Because it is provided ahead of time, ADP data is regarded as an important prediction tool for the NFP.

 An ADP National Employment Report is a monthly economic statistics publication that tracks nonfarm private employment in the United States.

The ADP National Employment Report is regarded as a useful foreshadowing of the more extensive Bureau of Labour Statistics employment situation report.

The Easy NFP Forex Strategy

The GBPUSD and a 15-minute chart are used in this strategy. A 15-minute chart enables the early volatility to fade while still capturing a huge potential move after market participants make a more sensible choice about whether to purchase or sell based on the news.

1. Do nothing during the first 15 minutes after the announcement of the NFP. A wide-ranging price candle will form between 8:30 and 8:45 a.m. EST, and it should be 40 pips or larger, given an average daily volatility of 100 pips. 

If average daily volatility were to increase to 150 pips, we would expect to see a candle with a range of at least 60 pips. 

If the candle after the news event is less than this, this strategy should be avoided. Never trade a day trade during a data release. Trade only after the NFP data has been issued, not before.

2. Keep an eye out for an inside candle. An inner candle is a 15-minute candle with the peak and low entirely contained inside the previous candle. Wait and see where it goes.

5. Financial Markets Committee Meeting

Although Central Bank meetings in all countries are important, America's Federal Open Market Committee meeting takes center stage since the US Dollar is now the world's reserve currency.

Every month, the committee meets to set rates and make pronouncements on current economic circumstances and the efficacy of current monetary policy, as well as to look forward to expectations of future economic conditions and adjacent monetary policy.

The committee is made up of members who vote at each meeting, with "Hawkish" members favouring a rate increase and "Dovish" members favouring a rate decrease.

The statement issued by the Committee is closely scrutinized by traders looking for clues as to how the Central Bank will act in the future, and even seemingly insignificant terminology can cause large market moves, as seen recently with the Fed's use, and then removal, of the term "patient" in relation to rate hikes.

FOMC meetings may create massive market volatility, as shown on March 18th, 2015, when the EURUSD jumped up 400 pips in a couple of minutes as markets considered the meeting to be USD negative.

These Central Bank meetings are also when we learn about monetary policy changes, such as the announcement of quantitative easing. This is important for currency traders, and we explain it thoroughly in our course.

EURUSD has fallen by nearly 600 pips since the ECB unveiled their next QE program on January 22nd of this year. Quantitative easing (QE) is a kind of unconventional monetary policy in which a central bank buys longer-term assets on the open market to boost the money supply and promote lending and investment. Instead, a central bank may acquire certain quantities of assets.

The crucial point with all economic data and news releases is not simply what the release signifies, but how the market expects and then responds to it; here is where trading possibilities arise.

 It may be incredibly difficult for beginning traders to trade news events due to the volatility and unpredictability. Fortunately, we offer a superb set of indicators that are ideal for trading news events.