The currency market is especially sensitive to changes in the economy and the release of economic news can have a major impact. This means that it’s important to be aware of the exact timing of reports and which releases are most important to trade based on. You’ll also want to be aware of any changes in market sentiment and what they mean for the currencies that are most correlated with them. Following economic news releases can help you trade accordingly and make a lot of money quickly.
Economic indicators that have a strong influence on all financial markets are those that change interest rates, inflation, unemployment levels, and retail income. These announcements have a direct impact on market sentiment. For example, if a country experiences a drop in unemployment, the currency may drop significantly. A drop in unemployment could make the currency look less appealing and weaken its value against other world currencies.
The relative importance of economic news changes throughout the day, with some economic news becoming more important than others at certain times of the day. Some countries’ interest rate decisions may be the most important at certain times, while others may focus on other events. Most of the economic news published by different countries reacts to the markets, but U.S. economic news is usually the biggest mover in the market.
As an example, a news release affecting the stock market can have a dramatic effect on the currencies that follow it. It can affect the dollar’s price against the euro and vice versa. A weak jobs report can send the dollar crashing against the euro. For example, the recent jobs report from the U.S. revealed that the country had created 56,000 jobs since last year. This was a disappointing number that led to a 60-pip sell-off in the dollar against the euro.
Purchasing managers’ surveys are another key source of economic news. This survey asks key purchasing managers in the economy to rate their business conditions, hiring plans, workforce size, and inventory levels. If the number is higher than expected, this would be a bullish development for the U.S. Dollar. A higher number would also hurt the EUR/USD.
The latest economic news can help you make a decision about your investments. For example, if you’re considering investing in a stock, knowing about the Purchasing Managers’ Index will help you make the right decision. You can also use this information to gauge whether a stock is a good candidate for you to buy or sell.
While the stock market may remain volatile, there are several notable news releases this week. Applied Materials beat estimates and issued guidance above expectations. General Motors reinstituted its quarterly cash dividend. Meanwhile, Wayfair cut 5% of its global workforce in order to cut costs. There is no major economic news today, but the calendar will pick up next week.
This month, the US government released its jobs report. The results surprised investors and traders and pointed to a healthier economy in the third quarter. Although wage growth has been slowing, firms are still able to find workers, which suggests that inflationary pressures are easing. The US government’s employment report also showed that wages were relatively low in July. As a result, bond yields rose and equity prices fell.