Overall, the world of trading is highly volatile, and numerous events determine its trends every day. Knowing these events and keeping an eye open for these news in the global arena may help you make a fortune on wise and timely trading decisions. Learn about the most significant and influential events to look for in search of profitable deals in Forex.
Central Bank Rate Changes
Changes in different countries’ Central Bank rates traditionally occur on a monthly basis, so it is strategically wise to track them and make trading decisions based on feasible changes. The Central Bank’s increase of rates typically leads to valuation of currency, the unchanged or reduced rates of which may have different effects on it depending on the overall economic perceptions.
GDP Reports
Since GDP determines the national economic health and affects tempos of economic growth, monitoring national GDP statistics may also help to make thoughtful and lucrative trading decisions. With downward GDP trends, the devaluation of currency may be expected in the near future.
Information on Inflation
This one is mostly determined by the Consumer Price Index, which reflects fluctuations in consumer prices and helps national banks to make policy decisions. Checking it becomes easier if you remember about metatrader 4 free download widely available today. Once the CPI rises, traders may expect the rise of currency value and can make a good profit on that fluctuation.
FOMC Meeting Reports
With the US dollar remaining a global currency on which the world’s trading community relies, reports of the US Federal Open Market Committee (FOMC) enjoy high influence on the Forex market’s volatility. FOMC reports usually do not contain open statements about further course of the Central Bank, but a talented and observant trader can find implied and suggested trends for investment decisions.
How to Trade on News Releases?
The daily issue of trading news is another traditional source of brokers’ information and decisions. Due to time difference, news is released at different times in different countries, and a thoughtful broker monitors them at the markets of interest to determine the current trends and anticipate market fluctuations. The key points significant to Forex market include the industrial production, unemployment rate data, business and consumer confidence polls, trade balance information, etc. The most volatile news reports relevant to the Forex market include those of NFP, FOMC, trade balance, CPI, and retail sales. Therefore, maximum attention should be focused on them for profitable decisions. All these are a potential source of viable trading data, but the most crucial aspect here is the timing of trading steps. While breaking news of global importance may have effects lingering for months in the market, the majority of regular news has a short-term of effect of 2-3 days.
Make sure you take all of these into account when trading. It will surely help you a lot.
If you don’t have enough free time or doubt your ability to predict market’s reaction to these important news there’s still a way to capitalize on them. During the last decade online trading industry evolved to provide solutions for people who aren’t professional traders. One of these solutions is using automated trading software which allows traders to execute orders on preset terms without physically being in front of their trading terminal. The software receives data feed from the exchange 24/5, so no big events and associated opportunities will be missed.
The Fed has decided to raise its benchmark interest rate by 0.25%, from 0.5% to 0.75%, citing a stronger economic growth and rising employment.
This is only the second interest rate increase in a decade.
The central bank said it expected the economy to need only “gradual” increases in the short term.
Fed chief Janet Yellen said the economic outlook was “highly uncertain” and the rise was only a “modest shift”.
However, the new administration could mean rates having to rise at a faster pace next year, Janet Yellen signaled at a news conference after the announcement.
President-elect Donald Trump has promised policies to boost growth through tax cuts, spending and deregulation.
Janet Yellen said it was wrong to speculate on Donald Trump’s economic strategy without more details.
She added that some members of the Federal Open Markets Committee (FOMC), the body which sets rates, have factored in to their forecasts an increase in spending.
As a consequence, the FOMC said it now expects three rate rises in 2017 rather than the two that were predicted in September.
Janet Yellen told the news conference: “We are operating under a cloud of uncertainty… All the FOMC participants recognize that there is considerable uncertainty about how economic policy may change and what effect they may have on the economy.”
Also, the Fed chairwoman declined to be drawn on Donald Trump’s public comments about the central bank, and his use of tweets to announce policy and criticize companies.
“I’m a strong believer in the independence of the Fed,” Janet Yellen told journalists.
“I am not going to offer the incoming president advice.”
The interest rate move had been widely expected, and followed the last increase in 2015.
Rates have been near zero since the global financial crisis. But the US economy is recovering, underlined by recent data on consumer confidence, jobs, house prices and growth in manufacturing and services.
Janet Yellen said the rate rise “should certainly be understood as a reflection of the confidence we have in the progress that the economy has made and our judgment that that progress will continue”.
Although inflation is still below the Fed’s 2% target, it expects the rise in prices to pick up gradually over the medium term.
The Fed also published its economic forecasts for the next three years.
These suggest that the Federal Funds rate may rise to 1.4% in 2017; 2.1% in 2018; and 2.9% in 2019.
GDP growth will rise to 2.1% in 2017 and stay there, more or less, during those years.
The unemployment rate will fall to 4.5% over the 2017-2019 period, the Fed forecast.
Inflation will rise to 1.9% next year and hover at that level for the next two years.
The dollar rose 0.5% against the euro to €0.9455, and was 0.9% higher against the yen at 116.17 yen.
Following the Fed’s announcement, Wall Street’s main stock markets were largely unmoved, but drifted lower later. The Dows Jones index closed down 0.6%, and the S&P 500 was 0.8% lower.
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