Whether trading stocks, forex, or commodities, economic news is one of the major drivers of price movement — and knowing what to watch can make all the difference in your trading strategy. This article breaks down the most important economic reports that online traders should be following to stay on top of market volatility.
The effect of economic news on asset prices varies depending on the type of news, but many important indicators have significant and persistent effects. For example, research shows that nonfarm payrolls and GDP advance releases generate responses to bond yields and exchange rates that are economically significant and measurably persistent.1
Similarly, news of a strong economy typically prompts interest rates to rise, while weaker-than-expected data may lead to lower interest rates. Other key economic indicators, such as consumer sentiment and inflation, also have long-lasting effects. In addition to official data releases, watch for speeches and hints from central bank officials. These often have a significant influence on market prices, especially when policy changes are announced.
It is important to remember that it’s not the actual data that matters, but how it compares to expectations. A big surprise can send markets soaring, so keep your emotions in check and avoid getting sucked into trading ranges on days of important announcements.
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