Forex Market Drivers

August 21, 2014

What affects the movements in the Forex market?

A nation’s currency is generally connected to its economy and is greatly influenced by a number of driver indicators. Forex traders would usually focus on upcoming economic releases that are to be published by the nations of their interested currencies. As the US dollar is the main currency to pair with, American economic indicators are considered to be important to take note of.

Such economic indicators and news can have an immediate direct effect preceding or following the release. The actual data release results alone do not create a reaction but generally traders will look to see whether results are within expectations or not. Anticipation can ultimately curb volumes or drive a short-term rally. Either way, a trader should understand that the preparation and anticipation could affect prices just as much as the actual reaction to the news itself.

What drives the Forex Economic Markets | MXT Global EducationPhoto Credit: World Economic Forum, 2014 cc

 

For example, in the lead up to the upcoming Brexit Referendum, Cheif Market Analyst Dane Williams spoke about some Brexit Risks to Cable in his Daily Market Update inside the Vantage FX News Centre.

Bank of England Governor Mark Carney subsequently chimed into the debate the following week, stressing the risk of recession for the UK if the vote to leave the European Union got up.

As you can see, such indicators and news pieces need to be monitored and it would be wise to keep on hand an Economic Calendar. You can bookmark one like ours, as well as monitoring it on Forex news sites, checking your MT4 platform through Session Map traders and also on the Trade Terminal.

We’ve taken our analysts’ top picks for which indicators to keep tabs on below.

Interest Rates

Interest rates are the most important drivers of the market and can help central banks manage an economy. Look out for:

  • • Interest Rate Decisions
  • • Housing Starts (affected greatly by interest rates)

Economic Growth

These generally have an immediate impact in the market and are important overall indicators of economic health of a nation. Bookmark:

  • • Gross Domestic Product
  • • Trade Balance
  • • Retail Sales

Employment

Important in understanding the economic growth of a nation, conversely as well, the future strain on a country’s economy if unemployment is high. Take note of:

  • • Non-Farm Payroll
  • • Unemployment Rate & Claims
  • • Employment Change

Inflation

Taking note of inflation rate announcements as well as Central Banks’ targets, these are also worth noting:

  • • Consumer Price Index (CPI)
  • • Producer Price Index (PPI)

Macro & Micro Economic Events & Political Stability

Political events such as elections, wars, embargoes and other such items will indeed affect a nation’s currency. In turn, even at plateauing times, nations will be judged on their overall economic and political stability. Movements in commodities and safe- haven products are strong indicators of such stability. In addition to keeping abreast of world news, forex traders need also be ready for each nation’s central bank’s policy statements and decisions.

Check out both the Forex Economic Calendar as well as the News Terminal, bridging the gap between retail and institutional traders and free for all funded Vantage FX live account holders.
 



Risk Disclosure: In addition to the website disclaimer below, the material on this page prepared by MXT Global Pty Ltd, does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. The research contained in this report should not be construed as a solicitation to trade. All opinions, news, research, analyses, prices or other information is provided as general market commentary and marketing communication – not as investment advice. Consequently any person acting on it does so entirely at their own risk. The experts writers express their personal opinions and will not assume any responsibility whatsoever for the actions of the reader. We always aim for maximum accuracy and timeliness and MXT Global shall not be liable for any loss or damage, consequential or otherwise, which may arise from the use or reliance on the service and its content, inaccurate information or typos. No representation is being made that any results discussed within the report will be achieved, and past performance is not indicative of future performance.

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