The Forex market is a highly volatile investment platform where the values of any currency can change within seconds. The main reason behind this extreme volatility is that the influence of external factors on this trading market. Currency is the main weapon for a nation to make deals, buy or sell a commodity. A nation can buy or sell its manpower, goods, etc. using the currency. So, it is needless to say that currently holds an important position in the economy of a country. All economic transactions revolve around the currency of a nation.
Hence some factors can determine the value of a currency. These factors are also used to justify how powerful the economy of a country is. When the economy is strong, traders rush to buy their currency. As a result, demand for that currency increases creating an upward trend for the price movement. On the other hand, when the economic condition becomes weaker, the currency value also drops due to the decrease in demand.
That’s why traders have been looking for such news events which reflects the condition of an economy for years. We know that it can be a little bit complex to follow charts and all. And that’s why many traders simply rely on economic data and information to have an idea of the price fluctuation. You can even consider it as a useful strategy besides your technical analysis while trading. This information also gives traders the scope of long-term trading with a promise of making good cuts.
So here are some of the events which release useful data for analyzing currency trading.
Central bank’s monthly rate decisions
The central banks are the main executors of the financial activities of a country. They play a huge role in determining the price of a currency. Each month, they come up with the decision whether the interest rate of the currency of a country will remain the same, increase or decrease. This decision plays a vital role and causes decent volatility in the stock indices. So, traders should be very cautious with this news event.
When the interest rate increase, it is generally termed as a bullish level indicating the increase in demand of that currency. Again, when the interest rate decreases it means the demand has dropped down, and currently it is in a bearish condition. Thus, traders learn what they are looking for in trade and trade accordingly.
Gross Domestic Product is an important economic indicator to state the condition of an economy. GDP means the overall amount of products or services provided by the people residing within the country. There are several sectors in GDP like agriculture, service, business, etc. And when GDP increases, it means the efficiency of the population has increased and thus the production has also accelerated. So, it means the economy of a country is booming. This booming economy then attracts the attention of traders to invest in their currency.
Now a declination in GDP means the economy is not as strong as it was before. So, it results in the fall of the currency as well.
This is one of the most useful economic indicators to determine the price of market goods paid by consumers. When the price of consumer products decreases rapidly, it leads to capital inflation. This means the supply of the currency is more than the demand. Thus, the value of the currency against another currency falls.
CPI also highlights if the price of a good is more or less for the consumers.
When the employment rate of a country increases it means the economy of that country is engaging. So, it makes a promising impression on the charts and trend lines creating an increase in the value of the currency. Again, the decrease in the employment rate makes the economy more vulnerable with an unpredictable strike of poverty. So, the employment rate indicates huge potential for the traders to invest in a trade.
So, if you are looking for more valid data to be sure to invest in a trade, these news events can play a vital role to guide you.