New forex traders should be keen on different news releases and events that determine market movements. Traders who are aware of the data they should look for and interpret can have an edge, which will help them in trading with the assurance of returns. Here are the top five forex news traders should follow:
Central Banks’ interest rate decision
Every month the Central Banks decide on whether to maintain the current interest rates, lower the rates, or even increase them. This decision is very important in currency trading as an increase will imply that the currency will increase in value while lower rates will be bearish, meaning the currency value will decrease.
The country’s GDP
GDP is vital when looking at how the economy of a country is fairing. Each year the central bank will give an estimated growth outlook and the rate at which the economy will grow. Interestingly a drop in GDP below market estimates will lead to a drop in currency value, and if GDP outperforms, the market currency value will increase.
Consumer Price Index
CPI is used to measure inflation, and offer data about average process in the past for a basket of goods. It shows whether life has become expensive or not. This information helps central banks in their policy and interest rate setting.
The rate of unemployment is important to markets and vital to Central Banks that use it to determine the performance of the economy. When the employment rate is high, interest rates will increase to balance inflation relative to growth, and therefore the figure is important for traders.
Usually, the US FOMC is very important because the US dollar is currently the reserve currency globally. Every month, the FOMC will set interest rates, the outlook of the current economic situation, and the effectiveness of the monetary policy. Traders look at the FOMC release for tips on how rates might change in the future.