The Impact of Economic News on the Forex Market

In this brief guide you will discover how to profit from economic news in the Forex market and how to optimise related costs with a Cashback programme.

Among the many factors that can influence the Forex market, economic news holds a prominent position. It is remarkable just how much influence certain pieces of information can have on the value of an asset or a currency, and more generally on price volatility.

Consider, for example, the decisions of a central bank, an employment report issued by a government agency, or periodic inflation data: these are pieces of information that an intermediate trader must take into account when deciding whether to enter, remain in, or exit a given investment position.

Fundamental analysis in Forex—which indeed involves the examination of this type of economic news—is therefore an activity that should be carried out consistently, even by utilising an economic calendar that helps the trader keep track of daily news and the key decisions made by the most influential market institutions.

Fundamental Analysis of Forex Markets: From Interest Rates to GDP Data

To simplify, the economic news in the Forex market that intermediate—and even experienced—traders should pay the most attention to are those concerning (and therefore capable of influencing):

• Interest rates.
• Employment.
• Inflation.
• GDP data.
• Decisions of central banks.
• Confidence indicators, both from businesses and consumers, as measured by statistical agencies.

As one might expect, changes in the data related to the above topics can significantly affect the value of currencies and prices. Understanding how, in which direction, and over what time frame these changes may occur is precisely the trader’s task.

The volatility in the Forex markets caused by news related to these data creates potential profit opportunities. It thus becomes essential to anticipate when to enter the market in response to specific Forex news and how to capitalise on the timely knowledge of such information.

How to Capitalise on Economic News in the Forex Markets

In other words, every piece of Forex news translates into a market signal that the trader is required to interpret to develop a winning Forex trading strategy, whether for the short or long term.

Consider a statistical study updating the public on the employment status of a population during a specific period: if the employment rate (usually referred to by the acronym NFP) increases in a given country, it is likely that the value of the local currency will rise. This creates an opportunity for the trader who obtains such information to invest a portion of their budget in purchasing that currency, and later sell it at a higher price to secure a profit.

The same applies to news regarding an increase in Gross Domestic Product (GDP) or to decisions made by central banks such as the European Central Bank, the United States Federal Reserve, or the Bank of England. Suppose inflation rises, that is, the Consumer Price Index (CPI) increases: in this case, central banks will typically revise interest rates upwards. This results in less money circulating, which in turn increases the value of the currency.

It is clear from the above that consistently monitoring the main economic news in the Forex market can, in most cases, mean being well-prepared to seize important profit opportunities.

But that’s not all: understanding “where the wind blows” – in other words, grasping the trends a market is heading towards – is also fundamental to preventing unexpected losses.

It is important to remember, in this regard, that fundamental analysis of the Forex markets can go hand in hand with the use of valuable tools provided by leading online brokers.

For example, the Stop Loss and Take Profit options, through which the trader can set predetermined levels at which a position will be exited, help maximise the profitability of a trade.

In particular, with a Stop Loss, a minimum price level is identified at which to sell before the price falls further below the so-called support level. Conversely, the Take Profit sets the exit point for a trade once a certain price increase is achieved, thereby avoiding the effects of a potential trend reversal.

Market News: Optimise Your Investments with STIC Cashback

Being aware of Forex news also helps the intermediate trader manage risk, as it assists in identifying possible scenarios—even negative ones—that could arise from a specific trade. In fact, knowing a particular piece of information can offer an understanding of the possible consequences that might follow.

In doing so, the trader will be able to make more considered decisions based on the budget allocated to a given position. It should be noted that traders also have access to solutions such as Forex Cashback, which allow them to receive periodic reimbursements. This enables them to invest with greater tranquillity and confidence, even when faced with potential market volatility.

Specifically, STIC Cashback is the programme that guarantees you a periodic refund, generally on a weekly basis, the amount of which depends on the volume of transactions executed. It is an excellent resource when you are required to invest a portion of your budget in a scenario that might be influenced by the latest market news. Being able to count on a reimbursement of fees translates into a cost saving that will help you make decisions more calmly.

Furthermore, STIC Cashback is partnered with some of the leading online brokers: by operating on their platforms you can also access innovative analysis tools that will help you understand the trends that may be hidden behind the latest Forex news.

Discover now how easy it is to enrol in the STIC Cashback refund programme and seize all the opportunities that economic news in the Forex market can offer you.