When the traders start trading, they should conscious of the different types of economic factors, big news events which control the price movements of the market. To read the chart patterns correctly, the business should know about the news and financial statistics. Because of the changes in the country’s economic conditions, the value of currencies of that country changes. There are five news events and financial indicators businessmen are needed to know to forecast the appropriate price fluctuations. These are being discussed below.
Role of Central Bank
Every month the world’s several central banks call a meeting to decide the interest rate. Sometimes they increase or decrease the rate, and sometimes keeps it unchanged. When the rate will be increased, this will be bullish for the investors as the value will be increased. On the other hand, if the rate declines, this will be bearish for the businessmen as the value of the currency will be declined. When the rate will be the same, this will be bullish or bearish for the people based on the current economic interpretation. The decision is made depending on the overall financial conditions and the prediction of future actions.
Gross Domestic Product (GDP)
Through the GDP, this can be easily quantified, how quickly the country is growing. This is one of the smartest indicators of the financial growth of the nation. When the GDP declines, the price of the financial instruments also declines. Similarly, if the GDP rises, the price will rise. The GDP will ultimately influence the central bank’s decision. Remember, GDP news can alter the course of the trend. So, never trade with big volume while dealing with the GDP.
Consumer Price Index (CPI)
The consumer price index allows knowing about the inflation rate. If inflation is high, the price of financial instruments will low. When the inflation rate is low, the value will be high. The central bank always monitors the rate to set the policy and determine the interest rate. The elite Singaporean traders at Saxo bank group always give priority to the CPI data before taking any trades. It helps them to minimize the losses as they trades are taken based on technical and fundamental analysis.
Employment indicators indicate the financial health of the country. When the citizen of the nation will be employed, the economic condition will be good. If most of the people are jobless, the central bank will increase the interest to control the inflation rate. If the export is less than the import, the foreign clients will not demand the currency. So, the value will be declined. Supply and demand of the currency pair depending on the economic position of the nation. When there is a lot of supply of the currency pair, the value will decline as usual.
In the year, every month the FOMC meeting help to determine the rates and declaration on present economic conditions, efface of the present financial policy, inviting predicting for the supposition of upcoming financial conditions and financial policy. The vote has occurred in the meeting. Hawkish members vote in favor of rising rates and the Dovish member will vote against the rising rates. When the news releases, the investors can get an idea of the central bank’s steps. The decision of the FOMC can bring big changes in the price movement of the currency pair.
These issues are required to be considered when the investors are going to take steps for their business. Professionals can easily find out this information as they have proper experience of the market. But, fresher will face problems to collect information about the economic factors and big news events, as they have less experience. So, they can keep the financial calendar which will help to find out the schedule of the big news events. As an investor, you need to know these issues to predict the future movement properly.