Actual Data Compared To Forecasts and Previous Readings

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Forex news with actual data compared to forecasts and previous readings can significantly impact the foreign exchange market. Here’s how:

Impact on Exchange Rates:

  • Surprise Factor: The key driver is the difference between the actual data and the forecast. A stronger-than-expected economic indicator (higher actual data than forecast) is generally seen as positive for the currency and can cause it to appreciate. Conversely, a weaker-than-expected indicator can lead to depreciation.
  • Underlying Strength: The news itself sheds light on the underlying health of a particular economy. Positive news about economic growth, inflation, employment, or trade can boost confidence in a currency, attracting investment and pushing its value up.

Example: Imagine a news release on US Gross Domestic Product (GDP) growth.

  • Scenario 1: Stronger than Expected Growth
    • The actual GDP growth is higher than the forecast.
    • Investors view this as a sign of a strong US economy, increasing demand for US dollars (USD) to invest in US assets.
    • The USD would likely appreciate against other currencies.
  • Scenario 2: Weaker than Expected Growth
    • The actual GDP growth falls short of the forecast.
    • This raises concerns about the US economy’s health, potentially leading investors to move their money elsewhere.
    • The USD could depreciate against other currencies.

Volatility and Speculation:

  • Forex news releases often trigger short-term market volatility, especially if the actual data deviates significantly from forecasts.
  • Traders may speculate on the potential impact of the news, causing fluctuations in exchange rates before the dust settles and the market digests the information.

Importance of Following the Calendar:

  • Major economic data releases are scheduled on economic calendars (https://www.dailyfx.com/economic-calendar).
  • By staying informed about upcoming news events, traders can anticipate potential market movements and adjust their strategies accordingly.

Remember:

  • Forex news is just one factor influencing exchange rates.
  • Other factors like geopolitical events, central bank monetary policy decisions, and risk sentiment also play a role.
  • Don’t rely solely on news for trading decisions. Consider a comprehensive approach that incorporates technical analysis and fundamental factors.

News that need to watch out closely.

  • Interest rate decision.
  • Retail sales.
  • Inflation.
  • Unemployment.
  • Industrial production.
  • Business sentiment survey.
  • Consumer confident survey.
  • Trade Balance.
  • Manufacturing sector survey.

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