The most important fundamental events every FX trader should know

There are major macroeconomic news that can change the direction of the market or move prices very rapidly. If a trader gets off guard it can quickly become an issue as losses resulting in sudden market sentiment changes can be huge. In order to stay informed and make wise trading decisions, the monitoring of fundamental events should be one of the priorities when trading Forex markets. In this guide, we are going to focus on top fundamental events and where to find them.

Fundamental Forex Events
Fundamental Forex Events

Why is the economic calendar like a GPS of the Forex market

Navigating Forex markets without monitoring an Economic Calendar is similar to driving a car to an unknown city without maps and GPS. Economic Calendar by being the aggregator for all important macroeconomic news events lets traders be always informed about upcoming indicators that can drastically affect the FX market. To be always ahead of the curve, check myfxchoice economic calendar here and monitor all fundamental events comfortably. If you check the filter’s high-impact option, you can monitor the most critical and price-mover fundamental news. During Forex trading, it is critical to know if anything important will be released, as these fundamental indicators can sometimes move markets for hundreds of pips or entirely reverse an already established price trend.

Top Fundamental News events every trader must watch closely

Which are the fundamental indicators that affect Forex prices the most? There are several including GDP, Nonfarm Payrolls (NFP), unemployment rates, central bank interest rates (FED interest rate), Consumer price index (CPI), Consumer Confidence Index, central bank announcements or meetings or chairmen press conferences, inflation data, major geopolitical events. Some of these are easy to monitor through an economic calendar and some of them like geopolitical news events will require attention not to miss. Below, we ranked the most impactful fundamental indicators that are released routinely and can be seen on the economic calendar.

Nonfarm Payroll or NFP

Nonfarm Payroll is a major economic indicator from the US that is published on the first Friday of every month and shows paid workers numbers that are not employed in farms, government, nongovernmental organizations, and private households. It measures the heartbeat of the economy and has a record of constantly shaking Forex markets. Price is often moving in both directions very rapidly when NFP is released, making it an attractive event for news traders. News trading is very risky and is not advised for newbies as it can wreck their accounts really fast. Higher than expected Nonfarm Payroll numbers will make EUR/USD prices generally fall because it will strengthen the US dollar. It has to be noted that when USD is stronger, EUR/USD price tends to fall as more Euros are necessary to buy 1 US Dollar.

Gross Domestic Product

GDP or Gross Domestic Product provides information on the overall economic performance of a country and can affect expectations for future interest rate changes. To make it simple for readers, positive GDP numbers can make the currency stronger as traders and investors are expecting a better economic environment. But higher GDP can also indicate potentially high-interest rates as during economic growth inflation also tends to increase, which can force central banks to increase interest rates to control inflation. Generally, when using macroeconomic indicators, it is a good idea to check the past performance of the price during the release dates of these indicators. Higher than expected GDP will cause EUR/USD to fall as it strengthens the Dollar. It could be useful to see the forecast for European Union GDP numbers from 2017 to 2027 to stay informed about future tendencies.

Central banks’ interest rates

Interest rates can affect inflation and have a major impact on Forex prices and the overall performance of the economy. Interest rates have an effect on unemployment, GDP, and government spending as it is one of the most fundamental indicators. Higher interest rates strengthen the currency but hurt the overall performance of the economy as fewer people and companies are willing to borrow money and increase spending. This decrease in spending and consumer debts causes the economy to slow down and can potentially lead to even recession. The current interest rate hikes by the FED are the perfect illustration of this phenomenon. Higher interest rates can cause higher returns on investment and increase demand for that currency, as investors will expect higher returns on their investments. Depending on which central bank has higher interest rates, the FED or European Central Bank (ECB) will affect EUR/USD accordingly.

Unemployment changes

The unemployment rate is a percentage of the total labor force that is unemployed and actively  seeking a job. This indicator is one of the most critical for measuring the strength of the labor market. Unemployment rates like all the abovementioned fundamental news releases can change the prices of EUR/USD drastically. A higher-than-expected unemployment rate will cause the USD to weaken and EUR/USD prices to rise as a result.  The Organization for Economic Co-operation and Development (OECD) constantly releases forecasts for important indicators including unemployment rates that are projected for the near future. These kinds of data can provide traders with a glimpse into future trends and help them make informed decisions during their trading activities.

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