How to read the economic news of the forex market

How to read the economic news of the forex market

News

Forex news presents major profitable opportunities for Forex traders. Behind the news we mean different releases of economic data. Every major economy regularly publishes statistical data such as GDP, inflation, unemployment and the like. If you track forex news online during these issues, you have a chance to make a lot of money.

However, we should warn you that potentially large profits always come hand in hand with great risks. Volatility fluctuations during these periods and prices can move in a chaotic manner. If you do not have a reliable trading plan for a particular event that has captured the economic news of forex, it is better not to participate in any trading at all.

How to read the economic calendar and forex market news

Markets tend to appreciate future periods in the economic forecast. Typically, economic growth means future prosperity, which then equals the strengthening of a country’s currency. Traders are looking for these increases in economic growth (positive online forex economic news), as they tend to suggest a shift to an upward trend. In contrast, economic reports that show weak economic growth lead to a weakening of the country’s currency. So, the future value of the currency is determined by what data falls under the decline or growth of the forecast.

Forex economic news calendar is a key tool that helps traders not to miss important events. Its structure is simple. Economic indicators are given in the table for the selected period of time. Along with the individual indicator you will see three columns of data: preliminary reading, forecast and actual reading. Before leaving, the calendar contains only the preliminary reading and forecast. The actual reading appears at the time of release.

The forecast is a so-called “consensus” forecast, or, in other words, the median of evaluations of a number of experts and market analysts who were interviewed for the publication of a particular issue. If the actual data is better than the forecast, the currency is growing. If the actual figures are worse than expected, the currency tends to depreciate. In most cases, “better” means more than predicted, and “worse” means it is less than predicted. However, there are a few exceptions to this rule, such as unemployment requirements and unemployment rates: the lower these figures, the better for the currency. It should also be noted that a number that is close to the level of the forecast usually has an insignificant effect. The greater the difference between the actual and forecast numbers, the greater the impact on the market.

Previous indicators are not as important as forecasted ones. However, sometimes previous readings are revised. These changes, as a rule, occur at the time when the actual reading is released. If the viewing is significant, it will contribute to the impact of the news on the market.