For the new Forex market traders, it’s highly important to be cautious of different financial indicators and subtle news events and press releases that mostly define the market. Only by being able to discern the valuable data and to penetrate its meaning, traders can build an edge for themselves.
Analyzing and reading a technical chart pattern is always challenging, and technical analysts need to have a solid understanding of all types of news events pertaining to local and international finance.
Crucial Financial News Events
Here are some of the crucial financial news which a trader should keep up-to-date with:
1. Central Bank’s Decision
Every month Central Banks all around the world meet to determine their respective interest rate in the context of the world’s current political and economic conditions. They confront the decision on whether they should raise, lower, or leave the rate unchanged. The decision made by the banks is tremendously important to the related economies and therefore, to the traders.
A rise in the interest rate is typically comprehended as a bullish feature for a currency. That means it meant to increase the value. Conversely, a rate decrease is counted as a bearish feature for a currency as it seems to decrease the value. An unmoved rate can play either as a bullish feature or a bearish feature depending on the financial perception of a given time.
While the decision taken is crucial, so is the relating and accompanying policy citation. This is where the Central Bank narrates its take on the economy and how they perceive the future. The citation also narrates the monetary policy concerning vital matters like the quantitative easing implementation and so many others. Those who are using the best Forex trading software can get news updates from their trading platform. So, choose your broker wisely.
2. GDP News
GDP is the abbreviation of the generic term Gross-Domestic-Product. It is a cardinal indicator of the financial health of a country. A nation’s central bank has an expected development or growth outlook every year that defines how fast a nation should develop. This expected development or growth outlook and the country’s ability to achieve it are measured with GDP.
When GDP cannot rise to an expected level or falls below that line, the value of a currency is more likely to fall. On the other hand, when GDP crosses beyond the line and overperforms, so does the value of a currency. So, all traders should keep a close eye on the GDP record of relevant countries.
3. CPI News
CPI is the abbreviated form of Consumer Price-Index. It is one of the most used measurement systems employed to estimate inflation. This index provides data on the historical mean rates paid by the buyers for a particular basket of assets. It how just the pricing of the assets in a market is. It finds the answer to that question to determine whether a consumer is paying more than he needs to or not.
Central Banks regulate and monitor such releases to assist them in their price and policy setting. If they can detect any evidence of a threatening level of inflation, they simply raise the interest to mitigate the situation.
4. Employment Indicators
The employment rate of a country is crucial for analyzing the market value of its currency. A central bank also takes it with grave importance while determining the interest rate.
A higher employment rate will definitely lead to an asset attaining a higher interest rate, whereas a lower interest rate will occur if there is a lower level of employment. Thus, the Central Bank tries to maintain the balance between inflation, growth, development, and interest rates.
Other than the employment rate, there are two more important factors relating to the job sector. One is the ADP and the other is the NFP.
The principle is to identify and understand the mass evaluation of all these economic indicators. Once a trader can develop the wisdom to determine how to leverage that mass sentiment, making money will only take some time and the trader will go on to succeed.