The most important events to trade on

The most important events to trade on

2021-11-25 • Updated

Every trader knows that economic data have a great impact on the Forex market. To become a successful trader, you need to follow economic indicators and Forex news. This way you will be able to keep up with the recent events and get clues about currencies’ movements.

All economic data releases are gathered in the economic calendar. There are a lot of different economic indicators there, so if you are a beginner trader, you won’t know where to look first. Don’t worry though! We chose the most significant events that you should definitely follow to predict the behavior of currency pairs you trade.

We offer to start with central banks’ meetings

Meetings are important not only because a central bank announces the interest rate, but also as it gives clues on the future monetary policy.

  • An increase in the interest rate is supposed to pull the currency up.
  • Alternatively, a decrease is seen as a bearish, i.e. negative sign.
  • If a central bank doesn’t change the rate, it may be either bearish or bullish depending on the market’s sentiment.

During the meeting, the central bank often presents its outlook on current and future economic conditions. If the bank sees them as encouraging, traders will expect future rate hikes and, as a result, a stronger currency. Vice versa, a weaker economic outlook will make traders sell a currency. Moreover, both interest rate and economic outlook should be taken into consideration.

Example

Let’s look at an example of the correlation between the central bank’s speech and the currency’s movement. On September 14, 2021, the  Governor of the Reserve Bank of Australia said that interest rates are unlikely to rise before 2024. As a result, the Australian dollar dropped by 400points against the USD.

1.png

Let’s turn to economic indicators.

GDP

GDP or Gross Domestic Product can be called the most important indicator of a country’s economic health and the broadest measure of an economic activity.

It is worth noting that in many advanced economies there are three versions of the GDP release – advanced, preliminary and final. An advanced GDP moves the market the most.

Any increases in GDP growth leads to an increase of a currency’s exchange rate. Vice versa, if the GDP data is weaker than anticipated, a currency will fall.

Example

Japan revealed better-than-expected GDP growth on August 16.

2.png

As a result, USD/JPY fell by 245 points in 3 hours after that release, and then the pair continued tumbling further. The whole drop was 490 points. Wow!

3.png

US Inflation Rate (CPI)

There are two different names for one term. You can meet both of them in calendars and articles. CPI or consumer price index represents average prices paid by consumers for a basket of market goods. As a result, changes of this index identify periods of inflation and deflation. Moreover, the data displays how effective the government’s economic policy is. There are two types of CPI: CPI and Core CPI (excludes the volatile energy and food prices) that are published at the same time. Traders pay a higher attention to the CPI data.

As you know the interest rate of a central bank depends on economic growth and inflation. That is why central banks pay great attention to CPI releases. If the CPI growth is close to the inflation target of a country or higher, a central bank will likely lift up its rate and a currency will rise as well. Alternatively, a currency will depreciate.  

Example

The US revealed worse-than-expected inflation numbers on September 14.

4.png

The US dollar has weakened and EUR/USD rocketed by 320 points in 30 minutes after the release.

5.png

PMI

As we talked about GDP, it is worth mentioning PMI. PMI or Purchasing Managers’ Index is an indicator that measures the economic health of manufacturing sector. The aim of the Index is to provide information about the current business conditions to analysts, purchasing managers, decision makers. Furthermore, it is used as a leading indicator of GDP growth or decline. Plus, central banks use these data when formulating monetary policy.

If a PMI goes down in a given country, investors may expect a dovish mood of a central bank. Moreover, they may reduce their exposure to the country’s equity markets and increase it into other countries’ equities with rising PMI reading.

Example

On June 23, Euro Area has published strong PMI numbers. Actual reports were better than forecasts.

6.png

As a result, EUR/USD has jumped by 415 points!

7.png

NFP

NFP or Nonfarm Payrolls is an economic indicator that displays the change in the number of employed people in the United States during a previous month, but it excludes the farming industry. The indicator is highly important as it gives clues on consumer spending that accounts for a majority of overall economic activity.

  • A higher NFP signals healthier and more robust economic growth.
  • Lower NFP points at a weaker economy. As a result, the US dollar falls.

It is released at the first Friday of a month and causes great moves in the Forex market as the USD is a part of many popular currency pairs. 

If the actual figure of the payrolls is like it was predicted, the USD movement will depend on the additional data such as the unemployment rate and average hourly earnings. The latter is a measure of inflation and has a big impact on the policy of the US central bank, so its role is becoming more and more important.

Example

The US has published the poor Non-farm payrolls on September 3. Only 235,000 Americans were employed in August, while the market expected 750,000.

8.png

As a result, the USD weakened, and EUR/USD surged by 380 points in 30 minutes!

9.png

We presented the most important events that will give you chances to boost your profit. Follow economic calendar events and market movements, build your trading strategy based on these events and earn more!

LOG IN

Similar

A right approach to Forex trading
A right approach to Forex trading

How to approach Forex trading efficiently? We observe important elements that help make Forex an integral and successful part of a trader's life balance.

Frequently asked questions

  • How to open an FBS account?

    Click the ‘Open account’ button on our website and proceed to the Personal Area. Before you can start trading, pass a profile verification. Confirm your email and phone number, get your ID verified. This procedure guarantees the safety of your funds and identity. Once you are done with all the checks, go to the preferred trading platform, and start trading. 

  • How to withdraw the money you earned with FBS?

    The procedure is very straightforward.  Go to the Withdrawal page on the website or the Finances section of the FBS Personal Area and access Withdrawal. You can get the earned money via the same payment system that you used for depositing. In case you funded the account via various methods, withdraw your profit via the same methods in the ratio according to the deposited sums.

  • How to start trading?

    If you are 18+ years old, you can join FBS and begin your FX journey. To trade, you need a brokerage account and sufficient knowledge on how assets behave in the financial markets. Start with studying the basics with our free educational materials and creating an FBS account. You may want to test the environment with virtual money with a Demo account. Once you are ready, enter the real market and trade to succeed.

  • How to activate Level Up Bonus?

    Open Level Up Bonus account in web or mobile version of FBS Personal Area and get up to $140 free to your account.

Deposit with your local payment systems

Be on top of your game

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

Beginner Forex book

Beginner Forex book will guide you through the world of trading.

Beginner Forex book

The most important things to start trading
Enter your e-mail, and we will send you a free Beginner Forex book

Thank you!

We've emailed a special link to your e-mail.
Click the link to confirm your address and get Beginner Forex book for free.

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera