What major economic news forex

What major economic news forex

Major Economic Indicators That Drive the Forex Market,The List Of 11 Economic Indicators That Impact the Forex Market

20/04/ · The most important Forex news #1: Unemployment Rate. One of the key responsibilities of the central banks around the world is to maintain a low #2: Gross Estimated Reading Time: 9 mins Real-time Forex News and the latest trading updates. Stay updated on the latest news about currencies and commodities markets One of the most important types of information available to a forex trader comes in the form of economic news or data releases. Such key news items concerning the economic health of a The List Of 11 Economic Indicators That Impact the Forex Market. 1. Gross Domestic Product (GDP) GDP is the widest measure of the overall health of an economy. It takes such a long 14/05/ · 2. Non-Farm Payroll. This is possibly the most important economic indicator for forex traders, released by the United States Bureau of Labor Statistics, on the first Friday of ... read more

The most widely watched inflation measure is the consumer price index CPI. The CPI index reflects the value of goods and services at the consumer level during the survey period. The Consumer Price Index is viewed as the benchmark inflation guide for the United States economy. The CPI measures the change in the cost of a fixed basket of goods and services which would include for example: food and beverages, housing, apparel, medical care, recreation, education, transportation, electricity, haircuts, restaurants etc.

The CPI is published on a monthly basis but the dates for the release change consistently, however, the time that the report is published remains static. The CPI is an extremely important metric to follow on a regular basis.

When prices rise, this erodes the purchasing power of the consumer. Inflation plays a major role in how politicians vote and how corporate planning takes place. The way businesses and consumers function can be directly affected by inflation. It is difficult to gauge pricing pressure in one specific good or service and use that as an overall barometer on inflation levels. For example, the price of spirits may rise by 10 percent in a single month but that would not cause alarm bells if the prices of other liquid drinks were falling or remaining constant.

The CPI is tracked as an index of goods in order to best determine overall trends for inflation. A second inflation gauge that traders should watch for within their economic data calendar is the Producer Price Index or PPI. This index is used to measure wholesale inflation at the intermediate goods level. So instead of looking at what the consumer is paying for goods, the government reports what wholesalers are paying for goods.

Generally, services at the wholesale level are not measured by the Producer Price Index. The producer price index is reported every month, in the United States by the Department of Labor. There are also some other inflation indices that are monitored in the United States, including the personal consumption expenditures released in the personal income and spending report.

The GDP deflator is another inflation gauge which is often evaluated. Sentiment surveys provide a good guide to what could eventually take place in the economy. If you are asking manufacturers what is going on before the government reports what is going on, you would likely have some early clues as to potential trends in the market.

Most developed countries report purchasing managers reports PMI , on a manufacturing and service level. The surveys evaluate many sub-components which include employment, prices paid and prices received, new orders, and backlogs. Housing statistics are an integral part of the U. economic data set. There are several housing-related economic indicators which are released every month including Housing Starts, Building Permits, New Homes Sales, Existing Home Sales, and Pending Home Sales.

Housing prices along with employment numbers are a strong reflection of inflation. As housing prices rise, inflation expectations will tend to increase.

As home prices increase, homeowners will typically spend more, as they feel wealthier. Housing starts tell investors the number of new houses that are at the beginning of the building process.

Before building a home, the contractor will need a permit, which helps forecast the number of new starts coming down the pipeline. New home sales record the number of sales of brand new homes which are on the market for the very first time.

This number differs from the existing home sales figure, which reflects the number of homes that were sold that have been sold once before. Lastly, pending home sales describe homes that are in contract, and could eventually be sold at a point in the future.

The employment number, the inflation gauges, as well as the housing and manufacturing numbers roll up into the Gross Domestic Product. The GDP reflects the aggregate growth in a country.

As such, the GDP report is widely watched by forex traders. Economic events can help traders gauge the strength or weakness of an economy. These numbers are the backdrop used by central banks to determine the course of monetary policy. Since the forex markets are highly correlated to changes in the interest rate markets, the changes reflected by economic data spills over into the currency market. The most important information that you can garner from the release of economic data is whether the release was greater, worse or in line with expectations.

Most traders believe that all the available information is priced into a currency pair, and only new information such as economic data will significantly alter the value of a currency pair.

One of the best ways for you to follow economic data is to find a reputable financial calendar. Not only will a good calendar tell you what data points to expect each day, but it will also relay the forecasted numbers which are expected by economists. The key to trading these numbers is to see if what is expected is likely to play out into an actual economic figure.

Changes to the value of a currency come when the actual economic release is different from what is expected. In these instances, the markets will move to reflect the new information.

The economic releases that hold significant importance include the employment numbers as well as inflation reports. The U. employment report, typically referred to as the non-farm payroll report is one of the most anticipated report monthly. This report generally reflects the economic picture on the United States, the largest economy in the world. Regardless of the report, traders who are looking to trade economic data will either position ahead of a release, or wait until the dust settles to take a position once a new price range is discovered.

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It has proven to be a poor predictor of turning points in the business cycle, despite a natural and logical association between economic growth, demand, and higher prices. In the s and early s, high inflation was a real issue for the US economy. In contrast, in the aftermath of the global financial crisis, there was a real danger of deflation sustained price decreases. Deflation hurts the economy by incentivising consumers to hold off making purchases because they will be cheaper in the future, so long as prices continue to fall.

As consumer spending constitutes such a large part of GDP, this will slow economic growth, and can create a vicious circle. Because inflation feeds into monetary policy so directly, the CPI report can have a high impact on prices in the bond , FX, and stock markets. As usual, it is diversions from expected results that tend to have the highest impact.

For example, if CPI comes in much higher than expected, it will alter the perceptions that the FED will be more likely to tighten monetary policy going forward.

All things being equal, this should be bullish for the US Dollar. Similarly, a CFD trader might interpret such inflationary data as being bearish for the stock market, as tighter monetary policy tends to curtail risk appetite. Since the financial crisis, we have been in a very low inflationary environment, which has forced the Federal Reserve to stick with very loose monetary policy. This has to some degree been responsible for the extended bull-market we have seen in the US.

The Industrial Production Index measures the level of US output in terms of quantity of material produced rather than Dollar amount relative to a base year over three broad areas: manufacturing, mining, and gas and electric utilities.

The report is compiled by the Federal Reserve, and is published around the middle of each month. Some of the index data comes from hard data, reported directly for certain industries from trade organisations or official surveys, but this may not always be available on a monthly basis. To fill the gaps, the FED makes estimates using proxies, such as hours worked from the Employment Situation report, or THE amount of power used in the month by the industry in question.

The full process for calculating the index is set out in the best place to look for a full rundown of the methodology involved — the FED's own 'Explanatory Pages'. There are hundreds of components that make up the index, which is then reported as an index level. For example, the preliminary release of the industrial production index for September came in at This is an expression of the current output relative to the base year.

At the time of writing, the FED used as its base period. The September level of The industrial sector is important because, along with the construction sector, it is responsible for the majority of the change in US output seen in the business cycle, and can offer insights into the evolution of structural economic changes.

The Industrial Production Index is procyclical. This means there is agreement between its movements and the changes in the business cycle. The correlation between this index and economic activity is close enough for some analysts to use this report as an early signal for how GDP might be performing. This indicator gauges how the US manufacturing sector is running as a proportion of full capacity.

The definition of full capacity is the greatest level of sustainable output a factory can achieve within a realistic framework. In other words, it takes into account things such as normal downtime. It is calculated as a ratio of the industrial production index divided by an index of full capacity. It may also provide clues about inflation. If factories are running hot, it's a reasonable assumption that producers may raise prices. If factories are running close to their maximum capacity, machines are likely to fail as a result of being overworked.

Taking machines offline poses the risk of laying off workers at a time of high demand, which is undesirable. Accordingly, manufacturers are likely to cope with high demand by raising prices, rather than laying off workers. This, in turn, is likely to feed through to consumer prices, leading to higher inflation. Conversely, if capacity utilisation is running at low levels, it is a signifier of economic weakness. As such, this indicator is used by the FED to gauge trends in manufacturing, the wider economy, and also inflation.

This makes it an important indicator for CFD traders to follow, particularly for bond traders, but it's also a key marker for those involved in the shares and FX markets. If you're keen to trade indicators like this, but you aren't ready to start trading with your own money, did you know that it's possible to trade with virtual currency, using real-time market data and insights from professional trading experts, without putting any of your capital at risk?

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Whatever the purpose may be, a demo account is a necessity for the modern trader. Open your FREE demo trading account today by clicking the banner below! This is more well-known as Advance Monthly Sales for Retail Trade, to give the report its full name. It is, however, better known by Forex traders simply as retail sales.

The Census Bureau, which is a division of the U. Department of Commerce, releases the report roughly two weeks after the month in question, at The report gives an early estimate of the nominal Dollar value of sales within the retail sector that is, the number is not adjusted for inflation and it also reports the number as a percentage change from the previous month.

Usually, it is this latter figure that CFD and Forex traders respond to. It is a closely-followed report and has the potential to send perturbations through market prices, especially if there is a big divergence between the reported figure, and Wall Street expectations.

Why is it such a closely-followed report? It's all about personal consumption expenditures PCE. PCE is a major contributor to the growth of US economy. It's also worth comparing with the Personal Income And Outlays report from the Bureau of Economic Analysis BEA.

This specifically includes a PCE component, which then feeds directly into GDP calculations. The data covered in that report is more comprehensive than the retail sales report. Crucially, though, retail sales data comes out a good couple of weeks earlier, thus providing a more timely insight into effectively the same area of the economy.

If retail sales are increasing, it is an indication of economic health, and it tends to have a bullish effect on the stock market. Strong sales data may lead to rising prices, however, meaning that there are inflationary considerations to be taken into account. This tends to have a positive effect on the US Dollar, but is bearish for bond prices.

Conversely, weakness in the retail sales report tends to depress the stock market, is bearish on the US Dollar, but bullish for bond prices. Certain components of the report may contribute to unwanted volatility from an analysis perspective. Motor vehicles, because of the expense of such items, tend not to be evenly distributed month to month. Accordingly, analysts often focus on retail sales, excluding auto sales in order to remove unpredictable variations, and to perceive underlying trends in the data more easily.

The report on Durable Goods Orders is released by the Census Bureau, a part of the U. Department of Commerce. The Advance Report on Durable Goods, to give it its full name, is released around 18 business days into the month, after the month for which it is reporting the precise day varies according to the schedule of other key releases at the time. Durable goods are defined as items that are expected to last for at least three years.

In other words, we are generally talking about expensive items that tend to be bought infrequently. This infrequency means that the report is subject to volatility and you need to be very careful about what you read into a single report in isolation. Analysts often exclude the transport component of the report, to try and mitigate this volatility.

Another method employed is to consider a series of reports together in order to try and gauge some kind of feeling for an underlying trend.

Also, beware of revisions to a previous month's data, which can be substantial. If demand is strong and companies have an upbeat outlook, we would expect to see increases in new orders for durable goods. On the other hand, in a weak economic climate, we would expect to see lower orders.

Therefore, strength in this report is bullish for risk appetite, and weakness is bearish. As far as CFD traders go, strength in durable goods is a positive sign for stocks, all other things being equal. In terms of the effect on the Forex market, it is a similar story for the US Dollar as it is for stocks: a strong report is bullish for USD, as a burgeoning economy would tend to lean towards a tighter bias in monetary policy from the FED.

This 'Weekly Report' measures the number of people making first-time claims for unemployment benefit insurance. This provides a useful update on the strength of the labour market, particularly when it coincides with the sample week used for the 'Employment Situation' report. Short-term changes in the labour market are much more likely to be reflected in the weekly initial jobless claims data, than in the monthly employment report.

Still, this is one of the more impactful weekly reports on FX and CFD prices. Knowing about which economic indicators impact the Forex market is one thing, but keeping on top of the releases is another. To properly keep yourself up-to-date, you need to plan ahead and have a good quality news feed. To help plan your schedule, try taking a look at Admiral Markets' Forex Calendar.

For a good quality news feed, look no further than the MetaTrader Supreme Edition plugin, for MetaTrader 4 and MetaTrader 5.

MTSE is a custom plugin, which offers a wide selection of trading tools, including a real-time news feed via 'Admiral Connect'. Try out trading on the back of economic releases, and see how you do with a demo trading account. You'll be using real market prices, but you won't be risking real money, so you can practise until you are proficient, and confident enough to face the live markets! We hope that these detailed definitions of economic indicators have helped you.

Of course, the list is far from comprehensive, but you should find that those included here are among the more impactful economic indicators for Forex trading. Bear in mind, that when we have described the possible impact of economic results, it is with the caveat of 'ceteris paribus'.

Which is to say, the actual results may be more nuanced than simply one variable being at play. A strong payrolls result would normally be considered a bullish result for the US Dollar, but Forex traders also need to look at how inflation expectations may be influencing monetary policy, the path other central banks are following, and what has already been priced into the Forex market.

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Economic indicators can have a marked effect on Forex and CFD contracts for difference prices. Accordingly, many traders keep a sharp eye on the economic calendar, to ensure that they are abreast of any potential volatility bumps that lie in the road ahead.

Around the world, various governmental and non-governmental agencies report on a regular basis, with certain pieces of economic information. The methods by which these reports are put together can vary considerably. Sometimes, the data is as direct as reporting monthly sales from a particular segment of the economy. Others may not come from hard data, instead being based on opinions recorded within surveys. Still, others may derive their findings from extrapolating existing data.

Some indicators will inform you about the current state of economy; while others may confirm what the economy previously did; and others may predict what is yet to come. This final set — known as leading economic indicators — are of particular interest to traders, as they offer the best insight into the likely trajectory of future economic activity.

The indicators that tell us about the current state of economy are called 'coincident'. Those that confirm what has already occurred are known as lagging indicators. The main difficulty for traders who are just starting out is knowing which are the important ones — those that are most likely to affect prices — and which ones are low-impact.

This knowledge is useful as there may be many economic indicators released in a single day, and it's not really realistically possible to keep an eye on them all. To try and help in this area, we have put together an explanatory list of Forex economic indicators. In our economic indicators list we've included those that are considered to be the most important. All of these have the potential to exert a strong effect on the financial markets.

As the US economy is the largest economy in the world, and wields some influence on the performance of financial markets globally, our list focuses on US reports, in an effort to provide you the best economic indicators. GDP is the widest measure of the overall health of an economy. It takes such a long time to compile that its direct effect on Forex and CFD prices is frequently muted — and by the time the data is published, many of the components are already known, and, therefore, expectations are often fairly accurate.

That being said, should the number come out markedly different to expectations, it still has the potential to move the market. Despite its lack of timeliness, it is still a very important indicator to understand because it is the single best measure used to confirm where we stand in the business cycle. The business cycle is a key concept in modern economics. It consists of an expansionary phase, whereby many areas of the economy grow at the same time, and a recessionary phase, when economic activity contracts.

Because the broadest gauge of economic activity is GDP, economists tend to determine where we are in the business cycle by looking at alternations of growth and contraction in GDP.

The technical definition of a recession is two consecutive quarters of contraction in GDP. A recession ends as soon as we see a quarter of growth. Politicians, policymakers, and economic analysts all focus heavily on this indicator, precisely because it is such a comprehensive measure. Investment banks adopting a top-down approach to Forex analysis will start by making projections for the general economic climate.

GDP is a key part of this kind of analysis of foreign exchange market macroeconomics. As professional traders, we need to be aware of it is as well, but you should also be cognisant of the fact that because GDP is a lagging indicator, its main use is to confirm what we already expect.

Its lack of timeliness means that its utility as a trading tool for short and medium-term trading is limited. US GDP only comes out once a quarter, and even the earliest estimate reports back many months into the past. Very useful, therefore, would be something that can be used as a close proxy for GDP, but which reports more frequently — which brings us onto our next indicator.

The blue vertical line marks the release of the Employment Situation report that was released on 1 November Notice how sharply the price moved in just one minute? Also, notice how much larger the average range of each bar becomes after the release of the report, compared to before. Part of the answer lies in the timeliness of the report.

The employment cycle and the business cycle are closely related and, historically, changes in nonfarm payrolls NFPs have moved along a very similar path to quarterly GDP changes. This close correlation means that payroll data can be used as a proxy for GDP. The crucial difference between the two is that nonfarm payrolls come out monthly, reporting on the month that ended just a few days before.

In contrast, GDP is reported quarterly, and with a big delay. Another part of the answer is the impact the report has on monetary policy. Maximum employment and stable prices are two of the FED's Federal Reserve Three Monetary Objectives these two key goals are often referred to as the FED's dual mandate. It follows then that employment data can have a serious effect on market perceptions of the future direction of monetary policy.

The unemployment rate is defined as the percentage of the labour force actively looking for work. In periods of recovery, unemployment acts as a lagging indicator.

We tend to see unemployment continuing to rise even after GDP has bottomed out. Unemployment is also closely tied to consumer sentiment see number five on our list. Extended periods of unemployment are extremely damaging to consumer sentiment, and consequently also affect consumer spending and impact on economic growth. Just as with nonfarm payrolls above, unemployment data offers CFD traders insights into one of the key metrics followed by the FED.

This means that any strong divergence from expectations are likely to have a big impact on Forex and stock markets. All things being equal, US labour market weakness would conventionally be considered to be bearish for stock prices and for the US Dollar.

If you want to make the most of economic announcements, like the US unemployment rate, getting an Admiral Markets trading account is the perfect way to do that! Trade the right way, open your live account now by clicking the banner below! The Federal Open Markets Committee FOMC meets eight times a year as part of its regular schedule to determine US monetary policy.

The outcome of an FOMC meeting can markedly affect the Forex market, should there be any disparity from the expected course. A key fundamental that drives Forex rates is the level of interest rates in the two countries involved, and the expectations regarding those interest rates.

If the FED makes a change to the federal funds rate, or simply alters perceptions about the future course of monetary policy, it makes a difference to the US Dollar, the most important currency in the world. As part of the statement released after each FOMC meeting, the FED provides forward guidance about the expected path of monetary policy.

This is a reasonably recent measure, aimed at providing greater transparency as part of an effort to reduce volatility in financial markets. As a consequence, changes in monetary policy are usually communicated to some degree in advance. This means that the forward guidance itself has the potential to move markets, just as much as an actual change in policy. A serious Forex or CFD trader will always ensure they are aware of the Calendar for FOMC Meetings.

At number five in our list we have two reports. The Consumer Confidence Index, compiled by the Conference Board, and the Consumer Sentiment Index, is compiled by the University of Michigan. These reports are important because nothing drives the US economy quite like consumer spending.

Consumer confidence lets us know how consumers are feeling. If they're feeling secure in their jobs and are optimistic about their future economic prospects, what can we infer? It is logical to presume that they may be more inclined to go out and spend. This will drive economic growth. Because consumer optimism or pessimism has such strong implications for the prospects of the economy, these two reports should be featured in any leading economic indicators list.

The Consumer Confidence Index comes out toward the end of the month, while the University of Michigan publishes its survey twice a month. This comprises a preliminary reading on the second to last Friday of the month. A final estimate follows two weeks later. These reports tend to have the most impact on the Forex and stock markets, when the business cycle is close to a turning point. Strong consumer sentiment points to a possible upturn for the economy going forward, which is bullish for stocks.

Weak consumer sentiment presages a downtown, and is a bearish signal for the stock market. The University of Michigan survey comes out more frequently, which is useful. The Conference Board's report samples a wider body of respondents, though, which implies greater statistical reliability.

Both tend to correlate fairly well with turns in the business cycle, but they are heavily influenced by the labour market. If unemployment remains high when other parts of economy are recovering, market sentiment may remain depressed, thus behaving as a lagging indicator in such circumstances. The CPI measures the cost of goods and services, index-linked to a base starting point.

This provides us with an objective handle on how fast prices are rising or falling. As we mentioned earlier in the article, price stability is part of the FED's dual mandate. When inflation is within target levels, it is considered normal or even desirable. However, if inflation veers too far off target for too long, it can have very negative effects on the economy.

Economists at the FED prefer to focus on the PCE price index that comes as part of the GDP report. This is only reported quarterly, so Forex and CFD traders often follow the CPI as it is a more timely indicator of inflation. The CPI's usefulness as a leading indicator for the economy is limited. It has proven to be a poor predictor of turning points in the business cycle, despite a natural and logical association between economic growth, demand, and higher prices.

In the s and early s, high inflation was a real issue for the US economy. In contrast, in the aftermath of the global financial crisis, there was a real danger of deflation sustained price decreases.

Deflation hurts the economy by incentivising consumers to hold off making purchases because they will be cheaper in the future, so long as prices continue to fall.

As consumer spending constitutes such a large part of GDP, this will slow economic growth, and can create a vicious circle. Because inflation feeds into monetary policy so directly, the CPI report can have a high impact on prices in the bond , FX, and stock markets. As usual, it is diversions from expected results that tend to have the highest impact. For example, if CPI comes in much higher than expected, it will alter the perceptions that the FED will be more likely to tighten monetary policy going forward.

All things being equal, this should be bullish for the US Dollar. Similarly, a CFD trader might interpret such inflationary data as being bearish for the stock market, as tighter monetary policy tends to curtail risk appetite.

Trading High Impact Forex News – Don't Get Caught Out,What Economic Indicators Are There?

Real-time Forex News and the latest trading updates. Stay updated on the latest news about currencies and commodities markets View our fast-updating and interactive economic calendar for important events and releases that affect the forex, stocks and commodities markets 14/05/ · 2. Non-Farm Payroll. This is possibly the most important economic indicator for forex traders, released by the United States Bureau of Labor Statistics, on the first Friday of One of the most important types of information available to a forex trader comes in the form of economic news or data releases. Such key news items concerning the economic health of a 20/04/ · The most important Forex news #1: Unemployment Rate. One of the key responsibilities of the central banks around the world is to maintain a low #2: Gross Estimated Reading Time: 9 mins The List Of 11 Economic Indicators That Impact the Forex Market. 1. Gross Domestic Product (GDP) GDP is the widest measure of the overall health of an economy. It takes such a long ... read more

While a central bank such as the Federal Reserve would never make a final interest rate decision on GDP alone, it does still serve as evidence used to base decisions around. In the s and early s, high inflation was a real issue for the US economy. In terms of the effect on the Forex market, it is a similar story for the US Dollar as it is for stocks: a strong report is bullish for USD, as a burgeoning economy would tend to lean towards a tighter bias in monetary policy from the FED. Download the short printable PDF version summarizing the key points of this lesson…. Figure 3: GDP data release leads to a sudden price advance 3: Consumer Price Index CPI The Consumer Price Index CPI measures the inflation rate in the economy compared to a base year.

This provides us with an objective handle on how fast prices are rising or falling. Although the majority of people fail and will never be able. OPEC countries consist of 15 or so major crude oil-producing nations like Saudi Arabia, Kuwait, Iran, etc. One of the key responsibilities of the central banks around the world is to maintain a low unemployment rate, what major economic news forex. The consumer price index CPI is the change in the price of a basket of goods and services.