What Events Impact Forex Trading?

There is a wide range of factors that can affect the price of any given currency pair, and it is impossible to account for every possible variable. However, there are certain key events that practically all forex traders need to pay attention to, as these events can have a ripple effect on the entire economy. Here are some of the major events that can have an impact on the prices of forex pairs 1.

WebTrader on a laptop with a highlight of the popular forex pairs

Elections & Political Events

Elections can have a significant impact on a country’s currency. Some parties might be seen as more conservative and fiscally responsible, while others as more democratic and amenable to spending. Generally, elections can be accompanied by increased market volatility.

Macroeconomic Data

Macroeconomic data is the most important and heavily relied upon information when it comes to forex trading. This is because it is the data which is most pertinent when it comes to the strength of an economy, i.e., what the currency valuation essentially is. You can find this data using the Economic Calendar. Popular macroeconomic factors include:

  • Interest Rates - The interest rate of one country relative to another is one of the most important criteria in determining an exchange rate. A higher interest rate will often lead to an appreciating currency.
  • Inflation Rates - Two of the most-watched inflation rate indicators are the Consumer Price Index (CPI), a weighted average of prices of a basket of consumer goods, and the Producer Price Index (PPI), an average of changes in the prices received by domestic producers for their output. Low inflation can force central banks to cut interest rates in the country, ultimately leading to a weaker currency.
  • Employment Rates - News concerning the rate of employment in a particular country often determines how strongly the country’s economy is viewed. A higher employment rate will often mean a stronger currency. In the USA, the Non-Farm Payrolls (‘NFP’) - a report on the country’s official employment data - is released on the first Friday of every month.
  • Sentiment Surveys - Sentiment surveys are a rough gauge of market expectations. For example, Consumer Sentiment is a closely watched indicator of future retail spending intentions. Most advanced countries will release Purchasing Managers Indices (PMIs) on a periodical basis. PMI is closely watched to determine future business spending intentions.
  • Gross Domestic Product - GDP is the overall growth of a country’s economy and is ordinarily followed by FX traders. Housing reports, employment figures and inflation rates all play an important role in determining a nation’s GDP.

How To Identify Events On Plus500’s Economic Calendar

You can identify and plan for macroeconomic events using Plus500’s economic calendar, which is accessible both on the website and through the platform. The calendar summarises major economic events and the currencies and/or other financial instruments that would most likely be affected.

You need to look for the events that may have an impact on the currency pairs that you are trading. Identify major economic events carefully and track them over time. Our CFD Trading Platform offers plenty of resources, coupled with a user-friendly interface and a suite of sophisticated trading tools and forex indicators.

However, please remember that any information contained in this article, on the Plus500 website or platform, is general in nature and it does not take into account your personal circumstances.

1A screen capture of the Plus500 platform, as of September 2019. Illustrative prices.

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