There are certain pieces of news that can come out that directly impact the Forex market. It is best to know the types of news that could come out that may have a direct impact on conditions in the market. Obviously, if you know what pieces of news may directly impact the Forex market, then you need to understand how and why certain pieces of news are likely to have an impact.
News Impacts Forex Differently than Stocks
Individual stocks can be impacted greatly when there is news that comes out that directly impact the stock. In fact, a single piece of news can bring down an entire company, and thus its stock. However, the same is not really true of currencies. News still has an impact on how currencies trade, but a single piece of news is not likely to completely sink the currency. It might take the pair down for a day or two, but it doesn’t tend to extend much beyond that.
No matter what, it is a good idea to know when news will come out and how it can impact the different currency pairs that you own. You don’t want to be caught off guard.
When you look at the pieces of news that come out about the currency pair that you are dealing with, you will see that the schedule is quite consistent. This is to say that you can predict when most of the major economic news will come out that will have an impact on the currency pair that you are trading in.
You need to make sure that you keep track of the calendar of potential news that can come out in regards to the currency pairs that you are most interested in trading. It is so important that you make sure you know exactly when the news will come out so you can position your trades accordingly.
The heaviest movements in a currency pair come when there is news that has a big impact.
Keep an eye out for pieces of economic news such as information about interest rate changes, consumer confidence, and other pieces of data that you can zero in on to see changes that will impact the prices of currencies against one another. Adapt to the news as it comes out, and alter your trades as necessary.
In general, some of the biggest macroeconomic news items that you should mark on your calendar for either side of pairs that you trade include:
- Unemployment rate
- Gross domestic product (GDP) growth rate
- Consumer price index (CPI)
- Overnight interest rate
- U.S. Nonfarm payrolls
- Organization of the Petroleum Exporting Countries (OPEC) data
- Retail sales
- Purchasing managers’ index (PMI)
- Housing data