The Foreign Exchange (Forex) Market is the largest and most liquid in the world, daily trading volumes exceeding seven and a half trillion US dollars. Every day, Forex brokers, traders and investors make informed decisions on where to move the currency markets, aided by a range of indicators that give insight into the movement of price action. April 20th is a high impact day for forex trading, and those involved will be looking to tune into the most up-to-date news coverage. In this article, we’ll be delving into the specifics of the forecasting of price movement in the forex market, as well as the influential indicators that help shape decisions.
What is High Impact Forex Trading?
High impact forex trading is the practice of making decisions around the entry and exit points of currency trades based on news coverage. These decisions typically take into account the availability of credible news coverage before executing a trade. High impact news coverage in the forex markets generally occurs on days when interest rate decisions are made, or when economic data is released. These decisions and data are rated according to their effect on currency markets, with the most heavily affected currencies being those for which the impact of the news is greatest.
What are the Major Forex Economic Indicators?
The five major forex economic indicators are new orders, manufacturing activity, inflation, credit conditions, and employment. Each of these indicators is monitored closely by forex traders, as they give insight into the future direction of the market.
New orders and manufacturing activity can give clues into the future direction of the market. If both continue to rise, then it could signal an increase in currency values. Inflation provides insight into the cost of living, which in turn is strongly related to currency values. Credit conditions measure the ability of borrowers to access capital, again providing clues as to future price action. Employment provides insight into the health of the economy, and its effect on currency values.
Top 10 High Impact Forex Economic Indicators
The top 10 high impact economic indicators for forex trading are: 1) Gross Domestic Product (GDP), 2) Consumer Price Index (CPI), 3) Interest Rates, 4) Retail Sales, 5) Unemployment Rate, 6) Producer Price Index (PPI), 7) Dollar Index, 8) Housing Starts, 9) Durable Goods Orders, and 10) Manufacturing Production. Each of these indicators provide valuable insight into the movement of currency markets, giving traders the information they need to make informed decisions.
Gross Domestic Product (GDP) is the monetary value of all the goods and services produced in a given country over a given period of time. In forex trading, it is used to measure the strength of an economy. Consumer Price Index (CPI) is used to measure the average change in prices of a basket of goods and services over a particular period of time. Interest rates are used to measure the risk associated with lending money in a given economy. Retail sales measure the total value of goods and services sold to the consumer over a given period of time.
Unemployment rate measures the number of workers in a given economy who are actively in search of employment. Producer Price Index (PPI) measures the average change in the price of goods and services produced by manufacturers. The Dollar Index measures the value of the US dollar relative to a basket of other major currencies. Housing Starts measure the number of newly constructed houses or apartments in a given month. Durable Goods Orders measure the total value of orders placed for goods with a useful life of three years or more. Manufacturing production measures the output of manufacturing businesses in a given period of time.
By understanding the basics of the top 10 high impact economic indicators for forex trading, traders and investors can make more informed decisions about where to move the currency markets. Those looking to tune into the April 20th forex news coverage will be more prepared to make profitable decisions with their money. Target audience: Experienced Forex traders
Forex News 20th April High Impact Review
The global economy is expected to shrink by 3.0%, the steepest downturn since the financial crisis in 2008, following a coronavirus-led collapse. The pandemic has had a devastating impact on economies and business worldwide, forcing countries, central banks and governments to intervene with a range of unprecedented measures. The US Federal Reserve’s (Fed) interest rate outlook and set the tone for markets before next week’s Fed meeting is predicted to be heavily influenced by the upcoming economic data release.
Uncertainty remains high in the financial sector, with the effects of Russia’s invasion of Ukraine, three years of high inflation and the Covid-19 pandemic itself, all impacting on market volatility. Additionally, the rise of the digital economy is reshaping the exchange of stocks and derivatives, an area which has traditionally been dominated by traditional trading outlets. As a consequence, forex traders need to stay informed and agile, taking into account all the latest influencing factors.
Impact of Vaccine Updates on Foreign Exchange Markets
Recent vaccine development updates have seen equity market optimism, with Dow Jones and S&P 500 stock indices both reaching all-time record highs, signalling a possible end to the current health and economic emergency. This optimism has been reflected in the forex market, with traders expecting a bump in economies of countries with successful vaccine rollouts and a strong recovery for US and euro-zone economies. However, there remain some risks for traders in terms of lockdowns and infection at present with countries still far from achieving R value dropping.
US Dollar Fluctuations
The US dollar continues to be the leading currency in the forex market, with shakes and fluctuations dictated by macroeconomic announcements coming from US jobs reports and Fed policy decisions. The Fed, which is closely watching the economic data, is holding interest rates steady at near-zero levels for another 6 to 12 months, trusting the US Congress to make additional support packages forthcoming.
The US dollar continues to be an attractive option in times of market volatility, and with traders averse to risk, its safe haven status remains unchallenged. Nevertheless, with the US now amongst the highest in terms of coronavirus infections globally, traders will need to be especially aware of health data releases and any news that the US is unable to contain the virus.
Overall, the forex market outlook for 20th April is mixed with a combination of high impact news releases that can be expected to have a marked effect on currency markets.