Whether you are interested in global economic developments or local economic news, you may be curious about what is happening in the United States and the rest of the world. The United States is the de facto reserve currency of the world, and the release of economic news from the U.S. affects nearly all currency pairs that involve the U.S. dollar. A higher-than-expected NFP will be bullish for the U.S. dollar, and bearish for EUR/USD.
The leading economists usually agree on the level of economic news, but you should take a few different measures to start your analysis. Non-farm payrolls, GDP, and inflation can all have a significant impact on the market. A low unemployment rate is usually a good sign, as it suggests that the economy is thriving, but too low interest rates can depress the country’s currency’s value against the world’s currencies.
Bloomberg Interactive is a financial news service that translates qualitative information into actionable insights. Bloomberg Interactive provides highly structured economic and corporate data, along with headline data and analytical commentary. Whether you’re looking for world-wide economic news or just an in-depth analysis of current events, MNI will have it all covered. With over three decades of experience in providing mission-critical information, it’s no wonder that it has earned the reputation of being a leader in the field of news and economics.
The most common way to trade economic news is to look for consolidation ahead of the big number. A breakout trade on the back of news is another common strategy. It’s possible to trade news on a short-term basis, but it’s better to wait for the market to react. Traders should consider this when deciding whether to buy or sell a currency. The euro was holding its breath awaiting the October number, and that was a good opportunity for a breakout trade.
Although economic news can have a significant effect on currency trading, it is not the only way to trade currencies. It can also affect the currencies of major exporters of raw materials. If a country experiences a drought, the price of oil may fall. The price of oil may fall or rise, depending on the availability and demand for oil in the region. In some cases, news about the price of oil and natural gas may be bad for the currencies of both countries.
A common technique for trading economic news is to make a long-term position by analyzing the news’s impact on the financial markets. The prices of economic derivatives allow a complete distribution of market expectation. Using this technique, a trader can better predict how the financial market will react. The downside is that news-based trading may require longer holding periods. Some positions may be open for several days, and overnight risk is involved. Additionally, the costs of overnight holding may be higher than the benefits.
Despite a sharp drawdown yesterday, U.S. stocks tried to bounce back with the news of hotter-than-expected consumer price inflation. The hotter-than-expected inflation fueled recession fears. Investors awaited tomorrow’s Fed and Bank of England monetary policy decisions. The euro and British pound traded little against the U.S. dollar, while core producer prices remained elevated. The outlook for small businesses was not so good.
Another major economic news report is the Purchasing Managers Index, or PMI. PMI measures the health of an economy. When it rises consecutively, it is considered bullish for the currency that is based on it. Positive housing data will boost the U.S. Dollar. Negative housing data will hurt the currency’s value and should be avoided by traders who are shorting the USD/JPY pair. For the time being, it’s still important to look for positive news for the USD/JPY pair.
Other economic news include the central bank of China, which has gone the opposite way from the other major central banks. Its economy has slowed down considerably in recent months, and the central bank is trying to revivify the economy by encouraging more credit market activity. It recently cut the main mortgage interest rate by 15 basis points – the largest reduction in history – to stimulate demand in the troubled property sector. The move has sparked concerns among economists and investors.