News trading guide, Beginner’s Guide to Forex News Trading
Economic announcements Share Almost every day there are major economic data releases that could have a significant impact on your current open positions.
These important figures are seen as statistical evidence to back up views on whether or not a region is doing well. The figures that matter Most global economic data releases are similar across the major world economies but, for the benefit of example, the US and its currency will be used.
Typically, these releases are closely followed by those who look to trade foreign exchange, but be aware that these releases also affect global stocks, commodities and treasuries. A major news trading guide to news trading guide aware of is that the news trading guide moves in the market usually occur if the figures come out majorly against general consensus.
Most economic data is preceded by economists and investment banks expressing a view on what they think these figures might be like, and publishing these views or expectations in advance. Current account balance Released quarterly at 1.
Trading the news is often difficult and not be suitable for everyone, but the volatility that follows can create lots of trading opportunities. Why trade the news? When news comes out, especially important news that everyone is watching, you can almost expect to see some major movement.
This quarterly statistic measures US trade in goods and services and includes income from investments overseas and payments to entities overseas.
A positive value current account surplus indicates that the flow of capital from these components into the US exceeds the capital leaving the country more money coming in than leaving the country. A negative value current account deficit means that news trading guide is a net capital outflow from these sources there is more money leaving the country than coming in.
Rising long-term current account deficits can have negative implications for the US dollar as it impacts the likelihood of future interest rate hikes if the economy is not doing so well.
Trade balance Released at 1.
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A positive balance is known as a trade surplus and this occurs if there are more exports than imports of the above goods and services. Export demand also impacts production and prices at domestic manufacturers. The implications over the long term of a deteriorating news trading guide balance is to put downward pressure on the dollar.
Consumer price index CPI Released monthly at 1. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance.
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Changes in CPI are used to assess price changes associated with the cost of living. Food and energy prices account for about a quarter of CPI, but they tend to be very volatile and distort the underlying trend. A rapid increase in the value of the CPI figures can give way to inflationary fears as rising prices could lead the central bank to respond by raising interest rates. Raising rates generally leads news trading guide less disposable income, reducing spending and thus decreasing inflationary pressure.
This is because some investors may decide to hold money in deposit as cash to earn interest rather than investing in the market, which is seen to be more risky Producer price index PPI Released monthly at 1. The PPI is a goods-only index and does not include the cost of transportation, wholesaling and retailing. It does not measure costs news trading guide the service sector. A rapid rise in PPI is considered inflationary and can depress bond prices and increase long-term interest rates.
The impact on the US dollar and stocks is not usually clear and has to be read in conjunction with other economic data releases. Non-farm payrolls Released monthly at 1. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity.
The non-farm payrolls statistic is used by government policy makers and economists to determine the current state of the economy, and predict future levels of economic activity. If employment is strong, interest rates and the US dollar will normally rise. If the figures are weak then interest rates and the dollar will usually fall. A strong payrolls figure can provide the stock markets with a boost if it signals a news trading guide in the economy.
Make sure to note this news trading guide in your diaries each month.
Unemployment claims Released weekly at 1. Market impact fluctuates from week to week and there tends to be more focus on the release when traders need to diagnose recent developments, or when the reading is extreme. If unemployment claims increase, you might expect the stock market and US dollar to fall in value. Gross domestic product GDP Released quarterly at 1. Usually, GDP is expressed as a comparison to the previous quarter or news trading guide.
As one can imagine, economic production and growth what GDP represents have a large impact on nearly everyone within that economy. For example, when the economy is healthy, you will typically see low unemployment and wage increases as businesses demand option reviews to meet the growing economy. Retail sales Released monthly at 1. Services are largely excluded from this statistic. The retail sales figure have additional relevance during the Christmas period as this sector makes a large percentage of its total yearly revenue at this time.
Bearish Bias AUD/NZD
Monthly changes are often erratic and the data is subject to later large revisions. Despite this, the implications of strong retail sales can be good news for stocks and the Working strategies for binary options dollar and vice versa Industrial production Released monthly at 2.
Losses can exceed deposits.
The industrial sector includes manufacturing, mining, and utilities. Although these sectors contribute only a small portion of GDP news trading guide domestic productthey are highly sensitive to interest rates and consumer demand. This makes industrial production an important tool for forecasting future GDP and economic performance.
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Industrial production figures are also used by central banks to measure inflation, as high levels of industrial production can lead to uncontrolled levels of consumption and rapid inflation. An acceleration of growth in industrial production is, in the first instance, positive for the US dollar and can put pressure on interest rates to rise. PMI is a very important sentiment reading, not only for manufacturing, but also for the economy as a whole.
Although US manufacturing is not the huge component of total gross domestic product GDP that it once was, this industry is still where recessions tend to begin and end.
Current account balance
For this reason, the PMI is very closely watched, often setting the tone for the upcoming month and other indicator releases. The magic number for the PMI is A reading of 50 or higher generally indicates that the industry is expanding. If manufacturing is expanding, the general economy should be doing likewise. As such, it is considered a good indicator of future GDP levels.
News trading guide useful figure to remember is The different levels between 42 and 50 speak to the strength of that expansion. The index is designed so that a reading above 50 means that purchasing managers expect manufacturing conditions to improve. PMI readings should rise as the pace of spending remains healthy. Accelerating manufacturing output will strain capacity, pushing producer price inflation higher.
If the PMI is well above 50, interest rates and the dollar may rise. Other releases There are a lot of other minor statistics in addition to the ones mentioned above.
These are released on an ongoing basis and serve to further reinforce the overall statistical picture of the US and for that matter, any other economy at any particular point in time. The Japanese Tankan report of Japanese investing intentions is an example. Remember to take note of these important data releases, as they news trading guide have a large impact on your current open positions and give further insight as to the real state of the economy you are monitoring.