Key Economic Events You should be Watching
The global market is affected by different events, whether they are of a political or financial nature. The trade war between China and the United States of America, for example, has caused several shifts in the balance between the Chinese Yuan and the American dollar, as well as the stocks of each country. While the day-to-day events may influence market trends and movements to some degree, there are key events that could cause greater movements for various assets such as currency pairs, stocks, or indices. While some events are a regular monthly, quarterly, or yearly basis, others may occur every couple of months or so.
The non-farm payroll (NFP) report refers to changes in the American job market, with the exception of the national farming industry. The results of the previous month are released on the first Friday of the following month. These reveal whether there were more or fewer people hired on a month to month comparison. This report can potentially affect the US dollar, sending its market value up or down.
For example, if the results exceed expectations, then the USD is expected to edge higher. If the results fail to hit the mark, on the other hand, the dollar’s market value is likely to drop. Those who are trading forex often look forward to this event and plan their position ahead of it. Mark this event on CM Trading’s economic calendar.
Crude Oil Inventories
Yet another monthly report is the monthly crude oil inventories, where the American oil drilling industry takes stock of its barrels. A rise in the total number of oil barrels following an increase in drilling could send the price of the WTI crude oil plummeting as the supply exceeds the demand in the market. A decrease in stock, however, could send the price of the American crude oil edging higher.
While this report may greatly affect the market value of this asset, traders should pay attention to the battle between the US and OPEC.
OPEC’s 14 members are responsible for 44% of the global oil production, as of September 2018. This number, in turn, gives the organization power to disrupt the international oil production industry. If OPEC decides to lower the market value of the oil, it could increase production willingly, or raise the price by restricting it.
The Organization of the Petroleum Exporting Countries (OPEC) consists of several countries from the EMEA region such as Iran, Iraq, Kuwait, Libya, the United Arab Emirates, Qatar, and Saudi Arabia which acts as the leader, among others.
Fed Interest Rate Decision
The Federal Open Market Committee (FOMC) members gather and make a fateful decision regarding where they will set the interest rate. In short, the committee may or may not set in motion a monetary policy regarding the interest put on loans and advances. Traders who partake in forex trading closely watch this kind of report, as short-term interest rates serve as a primary factor when speaking of currency valuation.
A higher than expected rate could give the US dollar a boost, as it is perceived as a sign of the economy’s health; while a lower rate could cause this currency to wobble and is seen as inflation-related woes.
If the FOMC decides to leave the rates unchanged, traders will turn for the FOMC’s statement which could be bullish or bearish.
This indicator measures the change in retail sales on a monthly basis and serves as the most prominent indicator of Consumer spending. The latter accounts for most of the country’s economic activity. The retail sales indicator is available for several countries such as the United States, Germany, Switzerland, Hong Kong, Australia, and the Eurozone to name a few.
A reading which tops the forecast is often taken as bullish for the local currency, as it indicates the people living in a specific country have money to spend. Naturally, a bearish reading would lead to the opposite result.
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