Table of Contents
When it comes to investing, the options are overwhelming, and there is no guaranteed return on it. Well, if you are lucky, the returns might be more than your expectations. This is why trading is so fantastic and fascinating for people.
However, the returns will not always be what you will expect. Many traders do not get what they want and are still investing in the market. However, if you are not into gambling, understanding market shape may help you deal with market strategies better.
Economic indicators and new market events are crucial to engage in better forex trading. Among all, forex trading comes with higher risk and return abilities. The market is volatile, and people are suffering because of the bad economic conditions of the market.
However, some people know how to make a profit from a bad market condition, and most of them are considering forex trading.
Well, forex trading conditions the trade between two different currencies. When it comes to forex trading, people get into the loop without any prior knowledge. Well, this can be difficult as well as risky for the traders as forex depends on better market knowledge.
Economic Events For Encouraging Forex Trading
Economic events are going to play a prominent role in managing your decisions in forex trading. Here we will discuss some of the crucial economic indicators that might influence your forex trading.
RoboForex will help you use your phone to understand the current market condition and proceed accordingly. However, follow these market indicators to get better knowledge.
Central Bank Rate Decision
Various central banks worldwide meet each month to decide the interest rates. Well, interest rates are responsible for the economic conditions of the market, and it also decides the value of different currencies.
Well, the central banks decide the rates depending upon the market conditions and various other things. It is not necessary to change the interest rates always, and sometimes they decide to keep the rate unchanged.
Well, if the interest rates increase, the value of currencies will increase (bullish), and on the other hand, if the interest rates go down, the value of currencies will also decrease (bearish).
So, you need to always focus on the market conditions and how the interest rates fluctuate significantly.
Consumer Price Index (CPI)
The Consumer Price Index measures inflation in the market among various economic indicators. With this particular index, you will be able to get information about historical average prices paid by consumers over the years.
In this way, you will be able to understand if you are paying more for the same basket of goods currently. Central Banks monitor the whole process, and if they see a certain price moving beyond the set bar, they try to increase the interest rates to balance the economic condition of our market.
Gross Domestic Product (GDP)
Gross Domestic Product is a crucial indicator of the economic condition of the contemporary market. The central banks always focus and expect on the growth outlook of a country which mainly determines how a country’s growth should be.
Well, if the GDP falls under the market expectation, then currency value tends to grow, and when the GDP cannot match market expectations, it tends to raise market inflation, in turn, loss of currency value.
This market measurement may suggest to you the current or near future movements of the central banks.
The unemployment rate can determine the economic condition of the market. The higher the unemployment rate, the better the interest rate will be. The central bank always tries to balance the economic condition of the market by increasing the interest rate while dealing with unemployment.
Did you know that the US Dollar is the world’s reserve currency currently?
This is why the USA’s Federal Open Market Committee meeting is the most crucial among all sorts of economic events. They meet in groups, and after the discussion, they divide into two different groups.
- Hawkish (members who are in favor of higher interest rates).
- Dovish (members who are in favor of lower interest rates).
According to the statement of the committee, traders can scrutinize the market condition before further investments.