Educating about economic data is critical in the fast-paced world of foreign currency trading. These indicators give critical information about a country's economic health and have the potential to alter currency prices drastically. Every news can influence market movements, from employment figures to central bank decisions. We'll break down the essential forex news in this guide, explaining how each indicator affects currency pairs and, ultimately, leads trading decisions.
 

1. Unemployment Rate - This report measures the percentage of the unemployed workforce actively looking for jobs. A higher unemployment rate can cause the currency to fall, while a lower unemployment rate can cause it to rise. For example, when the US economy added more jobs than predicted in January 2023, the US dollar gained, and the USD/JPY currency pair increased by more than 100 pips.

​

2. GDP Growth Rate - This report analyzes the total value of goods and services produced by a country's economy. A greater GDP growth rate can lead to a currency rally, while a lower GDP growth rate might lead to a currency sell-off. For example, when the US GDP growth rate was greater than projected in the first quarter of 2023, the US dollar rallied, and the USD/JPY currency pair increased by more than 50 pips.

​

3. Consumer Price Index (CPI) - This report tracks changes in the prices of goods and services purchased by consumers. A higher CPI can cause the currency to rise, whereas a lower CPI can cause it to fall. For example, when the US CPI was higher than expected in March 2023, the US dollar rallied, and the USD/JPY currency pair climbed by more than 30 pips.

​

4. Central Bank Meetings - Central banks hold these meetings to discuss monetary policy and interest rates. A decision to raise interest rates can cause a currency rally, whereas cutting interest rates can cause a currency sell-off. For example, when the US Federal Reserve increased interest rates in June 2023, the US dollar increased and the USD/JPY currency pair gained by more than 70 pips.

​

5. Retail Sales - This report measures retail stores' total sales of goods and services. A higher retail sales figure can lead to a rally in the currency, while a lower one can lead to a sell-off. For example, in April 2023, when the US retail sales figure was higher than expected, the US dollar rallied, and the USD/JPY currency pair rose by over 40 pips.

​

6. Trade Balance - This report measures the difference between a country's exports and imports. A positive trade balance can lead to a rally in the currency, while a negative trade balance can lead to a sell-off. For example, in May 2023, when the US trade balance was positive, the US dollar rallied, and the USD/JPY currency pair rose by over 20 pips.

​

7. Industrial Production - This report measures the total output of the manufacturing, mining, and utility sectors. A higher industrial production figure can lead to a rally in the currency, while a lower one can lead to a sell-off. For example, in February 2023, when the US industrial production figure was higher than expected, the US dollar rallied, and the USD/JPY currency pair rose by over 30 pips.

​

8. Housing Starts - This report measures the number of new residential construction projects that have begun. A higher housing starts figure can lead to a rally in the currency, while a lower figure can lead to a sell-off. For example, in July 2023, when the US housing starts figure was higher than expected, the US dollar rallied, and the USD/JPY currency pair rose by over 50 pips.

​

9. Consumer Confidence - This report measures consumers' confidence level in the economy. A higher consumer confidence figure can lead to a rally in the currency, while a lower one can lead to a sell-off. For example, in August 2023, when the US consumer confidence figure was higher than expected, the US dollar rallied, and the USD/JPY currency pair rose by over 20 pips.

​

10. Non-Farm Payrolls (NFP) - This report measures the number of jobs added or lost in the United States, excluding the agricultural and government sectors. A strong NFP report, indicating a healthy job market and economic growth, can lead to a rally in the US dollar, while a weak NFP report, showing slower job growth or job losses, can lead to a sell-off. For example, in February 2023, when the US economy added fewer jobs than expected, the US dollar experienced a sell-off, and the USD/JPY currency pair fell by over 50 pips.

​

11. Interest Rate Decisions - Central banks make these decisions to set the target interest rate for lending and borrowing. A decision to raise interest rates can lead to a rally in the currency, while a decision to lower interest rates can lead to a sell-off. For example, in September 2023, when the US Federal Reserve decreased interest rates, the US dollar experienced a sell-off, and the USD/JPY currency pair fell by over 70 pips.

​

12. Manufacturing Purchasing Managers' Index (PMI) - This report measures the level of activity in the manufacturing sector. A higher PMI figure can lead to a rally in the currency, while a lower PMI figure can lead to a sell-off. A PMI reading above 50 indicates that the economy is expanding, while a reading below 50 indicates the economy is contracting. For example, in June 2023, when the US manufacturing PMI figure was higher than expected, the US dollar rallied, and the USD/JPY currency pair rose by over 30 pips.

​

13. Services Purchasing Managers' Index (PMI) - This report measures the level of activity in the services sector. A higher PMI figure can lead to a rally in the currency, while a lower PMI figure can lead to a sell-off. A PMI reading above 50 indicates that the economy is expanding, while a reading below 50 indicates the economy is contracting. For example, in July 2023, when the US services PMI figure was higher than expected, the US dollar rallied, and the USD/JPY currency pair rose by over 40 pips.

​

14. Durable Goods Orders - This report measures the total orders for goods expected to last more than three years. A higher durable goods orders figure can lead to a rally in the currency, while a lower one can lead to a sell-off. For example, in April 2023, when the US durable goods orders figure was higher than expected, the US dollar rallied, and the USD/JPY currency pair rose by over 20 pips.

​

15. Unemployment Claims - This report measures the number of individuals who filed for unemployment benefits for the first time. A lower initial jobless claims figure can lead to a rally in the currency, while a higher initial jobless claims figure can lead to a sell-off. For example, in May 2023, when the US initial jobless claims figure was lower than expected, the US dollar rallied, and the USD/JPY currency pair rose by over 30 pips.

​

16. Producer Price Index (PPI) - This report measures the change in the prices of goods and services producers purchase. A higher PPI can lead to a rally in the currency.

​

17. Personal Income and Spending - This report measures the income and spending of individuals in the United States. A higher personal income and spending figure can lead to a rally in the currency, while a lower personal income and spending figure can lead to a sell-off.

​

18. Consumer Sentiment - This report measures consumers' confidence level in the economy. A higher consumer sentiment figure can lead to a rally in the currency, while a lower consumer sentiment figure can lead to a sell-off.

​

19. Existing Home Sales - This report measures the number of previously owned homes sold during a given period. A higher existing home sales figure can lead to a rally in the currency, while a lower existing home sales figure can lead to a sell-off.

​

20. New Home Sales - This report measures the number of newly constructed homes sold during a given period. A higher new home sales figure can lead to a rally in the currency, while a lower new home sales figure can lead to a sell-off.

​

​

​

​