Four economic indicators to watch if you want to succeed at trading currencies

Julie Brownlee, Fsp Invest, 16 Jan. 2015

Tags: forex, forex trading, economic indicators, forex economic indicators, trading currencies,



If you decide to trade forex, one thing you must do is keep an eye on a number of economic events that can affect the currencies you’re trading.

If you don’t know when crucial data is due for release, you could get a nasty shock if you’re in a trade when it does a swift about turn.

So what economic indicators do you need to know about?

Read on to find out…



The most important economic indicators


There are four economic indicators that you need to know about when you trade forex.

Depending on the currency you’re trading, you need to know when this data is coming. If the data shocks the market, the currency pair you’re trading may react in a way you’re not expecting.

Here are the four economic indicators you need to be aware of…


Forex economic indicator #1: Interest rates


Interest rates are a big deal in the forex market.

Interest rates have a large bearing on the value of a currency. So when trading currency pairs, you need to know when a decision is due for both currencies.


Forex economic indicator #2: Trade deficits


A large trade deficit is generally bad news for a country’s currency.

If data comes out that shows a larger than expected trade deficit, chances are a currency will weaken.


Forex economic indicator #3: Economic growth


If a country has a strong economy, it tends to attract more investment, which strengthens its currency.

So if economic growth data shocks to the downside it can cause a currency to weaken.


Forex economic indicator #4: Inflation


If inflation comes out higher than expected, this can weaken a currency. It means that the real yield on a currency isn’t as high.

So there you have it, four forex economic indicators to watch if you want to succeed at trading currencies.

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