Forex news strategies

As every proficient trader will be well aware, economic news from around the world has a massive impact on Forex trading. Economic data is the surest shot catalyst for short-term movements in the Forex market. But how does one pay attention to the right pieces of news? How to integrate Forex news strategies into trading patterns?

Selecting what news to track

With at least 8 major currencies and up to 16 pairs of them available with every broker, there will always be some economic update slated for release.  

In general, every day will see at least 7 pieces of news-worthy economic information released from the 8 currencies. Of course, the value one associates to each piece of information will vary depending on its gravity.

Specifically, it makes sense to track news from the particular countries whose currency pairs one is trading in. But seeing that the US dollar forms a part of almost 90% trades, as a general rule of thumb, it is vital to follow every news update about the dollar.  

Here are 8 of the most traded currencies in the world:

  1. US Dollar (USD)

  2. Euro (EUR)

  3. British Pound (GBP)

  4. Japanese Yen (JPY)

  5. Swiss Franc (CHF)

  6. Canadian Dollar (CAD)

  7. Australian Dollar (AUD)

  8. New Zealand Dollar (NZD)

Essentially the nature of Forex news strategies depends on certain specific economic indicators and factors.

What are the key factors to consider?

Every country will practically have a new economic data coming through every day. But sifting through each piece of news will require time and energy that one cannot afford.

Most Forex news trading strategies depend on news about the following sectors:

  • Interest rate decisions by central and state governments

  • Retail sales

  • Industrial production

  • General inflation update

  • Unemployment rates (spike in rising/fall)

  • Trade balance

  • Indicators from manufacturing sector surveys

  • Consumer confidence surveys

  • Public sentiment of specific big business surveys

However, the relative importance of these releases can change from time to time for the same country. It depends on the rate of impact a specific factor has on a country’s overall economic condition.

For instance, unemployment could be key one month, and retail sales or interest rates might be more important indicators the next month. Your Forex news strategies, therefore, need to be flexible and specific to the timeframe.  

Final Takeaway

There is no denying the fact that the currency market is prone to short-term movements and volatility on the basis of economic data emanating from countries on a daily basis.

To stay one step ahead of the game, it is important to know what kind of releases are expected when. It is also crucial to have an understanding of what indicator holds greater value over others given the economic situation.

Forex news strategies can help short-term traders in a big way make significant increments. All you need to do is be aware of the right things at the right point of time.

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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