The forex market is the largest, most liquid financial market in the world of trading. Therefore, any forex news can cause huge waves of volatility in the market. It’s one mean market mover.
Forex news lets traders and investors speculate of the prices of the currency pairs they follow. Also, these news items open up doors for chances of gaining huge profits from price swings.
Luckily, you don’t have to monitor all countries’ news related the forex market. You only have to focus on a bunch of currencies and currency pair. More importantly, you usually only have to focus on the king dollar.
Forex News about the US Dollar
The US dollar is the reserve currency of the world, so any news relating to it influences the forex market across the board.
Thanks to the Bretton Woods conference, the greenback has become the king of the currencies. Then came the Nixon decision of 1970s, the dollar ultimately detached itself from the gold standard.
Rate Announcements by the Federal Reserve
Because of the US dollar’s huge influence, its movements don’t only affect/follow the movement in the forex markets. Other financial markets like the stock and commodities markets also follow the buck.
And a currency’s biggest influence is the setting of key interest rates. For the case of the greenback, the US Federal Reserve releases statements from the Federal Open Market Committee (FOMC) to describe the monetary policy.
In these statements, traders know how the central bank handles the money supply in a country. So, with every Federal Reserve announcement comes a huge wave of market movements for the forex traders.
CPI, Inflation News
Another closely monitored forex news is the inflation levels. Inflation refers to the change in the price of goods over a certain period of time.
The most popular metric to measure inflation is the Consumer Price Index (CPI), which comes out every month.
The tracking of inflation and pushing it to levels within the central bank’s target rate are among the Federal Reserve’s mandates.
Another part of the Fed’s mandate is the tracking and setting of the employment data. In other words, the US central bank pledges to create more jobs.
Jobs-related data include non-farms payrolls, jobless claims, and the ADP or private payrolls.
News about US job creation has lot of power to move the US dollar. In general, when the data shows that the US creates more job than the market anticipates, the dollar rises.
Among these metrics, the NFP report has the closest link to the forex market. It’s released every First Friday of every month, and traders typically prepare and speculate on it even a week before its release.
Other Forex News
Apart from the Fed policy-setting meetings and jobs data, there are still many other economic reports that investors monitor closely.
Among these is the Gross Domestic Product (GDP), which help the Fed measure the size of the country’s economic expansion.
To measure the GDP, the central typically uses data from three sectors, which are services, manufacturing, and construction.
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