So, for example, it will be the bullish impact on the USD/JPY and a bearish effect on the EUR/USD. You see, banks also borrow money from each other, but they do it on an overnight basis. Central banks try to influence the overnight rate by lending in the money market at their own overnight rate and it is an important tool in their monetary policy arsenal.

However, a deep understanding of what each data point means or an ability to do economic forecasting is unnecessary Forex for forex trading success by trading the news. This type of trading strategy is known as ‘forex news trading’.

#9: Housing Data

The U.S. Dollar is the de facto reserve currency in the world and the nonfarm payrolls data is usually released on the first Friday of each month by the U.S. While there is not an equivalent data release in every economy, you should definitely keep an eye on the U.S. NFP as it will eventually have major impacts on almost all currency pairs involving the U.S. By now you should know how to configure your https://www.plus500.com/en-US/Trading/Forex Forex Factory calendar as well as how to manage news events. Let’s finish up this tutorial by discussing how price action plays a role in all of this. However, if you are just starting out and wants to feel the pulse of the market, the 5 economic news releases we discussed should act as a good starting point. The Consumer Price Index measures the inflation rate in the economy compared to a base year.

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Nevertheless, anytime you see a forecast of growing CPI, it would be bullish news for the currency. For example, if the forecast for CPI of UK is 2.5% for a quarter, and the CPI of Australia remains at 1.5%, then it will have a bullish effect on the GBP/AUD. In figure 2, you can see the GDP growth rate of the USA usually mains close to the UK’s. When you see the GDP growth rate of the USA is above compared to the UK’s growth rate, you can interpret it as a bearish signal for the GBP/USD.

• It’s much easier to ride out a major news event if you know your position is 200 pips in the money.
• They bait investors with favorable benefits and incentives on their investment deals.
• OPEC countries consist of 15 or so major crude oil-producing nationslike Saudi Arabia, Kuwait, Iran, etc.
• However, I bet that 80% of you reading this right now don’t have a trading journal, or you don’t properly record your trades.
• Before we end this section, I would like to point out that the news which causes these types of moves isn’t always immediately apparent.

So, out of the hundreds of news releases, how do you know which news events you should keep an eye on? The good news is, just like https://nitter.poast.org/search?q=%23dotbig the Pareto principle, only a handful of news releases are responsible for the bulk of the price movement for most currency pairs.