How economic reports influence financial markets
Economic news has the power to influence the forex market. It is thus a potential earnings factor. On the other hand, although the markets react to most economic news, only those which concern the great powers really make the difference. A favor, so the news about powers such as the United States or Europe. Here are some examples of economic reporting that deserve your attention:
1. The interest rate central banks influence the value of the currency trading by increasing, maintaining or decreasing interest rates. If one increases, the other also, and vice versa. Indeed, more the interest rate is high; the value of a currency will also increase because the borrower will pay a larger sum, injecting a more substantial amount of foreign capital. An increase in the interest rate is therefore usually seen as a good thing. Conversely, a decrease of it is not good sign.
2. The economic indicators they are used to give a general idea of the economic health of a country, by the analysis of the current situation and prediction of future events. They include amount of clues and reports, such as the gross domestic product (GDP), gross National product (GNP), consumption, investment expenditure or expenditure.
3. The rate of inflation as a general rule, a country where the inflation rate is high sees its purchasing power decline, and its currency to weaken compared to other countries. In order to strengthen the value of its currency, the Central Bank of the country may decide to raise interest rates.
4. The employment figures is one of the main indicators reflecting the economic health of a country. Each country has its own report, published regularly, as, for example; the Non-Farm Payroll released every month in the US.
5. The trade balance a positive trade balance will have a positive influence on the currency trading of the country.
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