The publication of economic news is the presentation of a wide variety of economic statistics and reports, like the Gross Domestic Product, inflation, interest rates or unemployment, the trade balance of the industrial retail production index. And several important studies and data are the announcements from the most prominent national financial organizations and authorities.
The Department of the Treasury and the Federal Reserve in the USA or the Bank of England in the United Kingdom are examples of such financial institutions. To illustrate the influence of economic news on trading, let us use an example.
On June 13, 2018, the Federal Reserve in the USA increased its key interest rates by 25 basis points from 1.75 percent up to 2 percent. The effect was that the dollar gained strength against the emerging market currencies and reached three weeks high against the Japanese yen after the announcement of the Fed. The way of profiting from this situation was to buy US dollars and sell the Japanese yen on the trading platform.
👍Pros and Cons👎
- Deep Insights: Economic news provides insights into a country’s financial health.
- Informed Decisions: Traders can use economic news to make informed decisions.
- Easy Tracking: Tools like Olymp Trade’s Economic Calendar make tracking economic updates easier.
- Information Overload: There’s a lot of economic news, and it can be overwhelming.
- Fast-paced Changes: Markets can react rapidly to economic news, making predictions challenging.
- Risk Involved: Despite all the information, trading involves risk and should be done cautiously.
|Economic Indicator||Potential Impact on Market|
|Gross Domestic Product (GDP)||A strong GDP can lead to an appreciation of a country’s currency.|
|Inflation||Inflation can cause a country’s central bank to raise interest rates, which may lead to an appreciation of the currency.|
|Interest Rates||Higher interest rates can attract foreign investors, leading to an appreciation of the currency.|
The economic calendar at Olymp Trade
To keep track of economic information uses the Economic calendar available on the Olymp Trade platform. You will find it in the “Analytics” section in the menu in the top left corner.
To read more about the Economic calendar provided by Olymp Trade, read the following article about using the calendar tool on Olymp Trade.
Have a great time trading!
Frequently Asked Questions
- How does economic news influence trading?
Economic news can greatly affect the valuation of financial instruments, influencing trading decisions.
- What is Olymp Trade’s Economic Calendar?
This is a tool provided by Olymp Trade that helps traders keep up with major economic events and news.
- Does economic news guarantee profitable trading?
While economic news is a valuable resource for informed decision-making, it does not guarantee profitable trading. Risk is always a factor in trading.
- How do interest rates impact the market?
Interest rate changes can affect foreign exchange rates and bond prices, impacting the overall market.
- Why is it necessary to consider multiple economic indicators?
Considering multiple economic indicators can provide a more comprehensive understanding of the market’s potential movements, thereby aiding in decision-making.
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