Six Economic Factors That Influence the Forex Market


When the economic condition of a nation changes, it affects the value of that nation’s currency. In the Forex market, investors trade the currency pair, so, this change automatically influences the market conditions. So, before taking any major decision, investors should try to consider the economic news. Sometimes, investors avoid the news and are not able to predict the direction of the market properly. There are six economic factors that affect the price movement. Let’s learn about them.

Employment Data


If the employment data decreases, the value of the financial instruments will decrease. When the lifestyle of citizens will not better, that means the financial condition of the country is not good. So, the clients will not be willing to invest here. The data is announced by the Bureau of Labor Statistics on the first Friday of the month. So, if the result indicates that the rate is high, the economic condition is not good. On the other hand, if the rate is low, the condition will be better.

Interest Rates


The central bank decides the interest rate of the country. Sometimes they increase the rate, some decrease the rate. When the rate increases, the value rises. If the interest decreases, the value declines. Investors focus on the decision of the central bank. Sometimes, the rate becomes stable which is suitable for the novice trader. In the Forex market, the price of a certain asset rallies higher when the bank hikes its interest rate. On the contrary, when the bank cut down the interest rate, the price of a certain asset falls.

When the price is high, people will see a bullish trend. But, if the value decreases, investors will find a bearish trend. When it is stable, the bearish or bullish can be appeared depending on the situation. So, you can clearly understand that the interest rate change has a massive impact on the market trend. If you want to determine the trend in a perfect manner, you must learn to evaluate the interest rate properly. Failing to do so, will result in major problems.



Inflation rate increases when the supply of the good and commodities are less. It affects the value of the currency. The consumer will not demand the currency of the country in which the inflation amount is high. When the inflation amount increases, the value of the currency will be decreased. Some of the traders in Singapore often take advantage of inflation to trade the options market. But those who are new, should view this page at Saxo and see the options trading condition.

Though the inflation rate has no significant impact all of a sudden it has a long-lasting effect. When the inflation rate is higher, you can assume the economy is not doing well since the currency is losing its strength. This means people will need more money to buy the same asset. It is better to deal with the currency pair which has stable rate change in the inflation segment.

GDP (Gross Domestic Product)


GDP is mainly divided into four classifications; government spending, business spending, private consumption, and total net exports. When the GDP is high, it indicates that the financial position of a country is good. But, if the GDP is below a certain level, it will indicate that the country’s financial position is not good. So, depending on the GDP rate, the value of the currency pair will be high or low. But do not think that analyzing the market data based on the GDP news is a very easy task. It requires strong fundamental knowledge about the market. Keep the risk profile always low and you will be able to earn a decent amount of money.

Many professional traders take advantage of the GDP news. If you manage to master the art of fundamental analysis, by taking the GDP data into account, you can expect to trade this high-impact news with a level of precision. But never try to push your trading limit to the next phase without having strong technical skills. The best trades are executed when the technical and fundamental data are analyzed properly.

Export and Import


Export and import data of the country also affect the direction of the market. If the export is higher than the import, the value will be high. However, if the import rate will higher than the export, the price will be declined. So, the country should try to increase the export if they want to increase the value of their currency. When the foreign consumer will demand a specific currency, the price will be automatically increased. That’s why many nations try to catch the eye of investors so that they can improve their financial condition.

Thousands of expert traders depend on the export and import data to evaluate the overall state of the economy. Though it’s a bit complex technique, you can easily learn this by reading books and articles. When you have the ability to analyze this data, integrate the result with the technical variables. This should give you the perfect place to take trades with low risk.

Macroeconomic and Geopolitical Events


Sometimes, because of elections and financial crises, major changes happen in the market. The wars between countries can also influence the market by changing the price movement. So, when the nation will go through some difficult or good situation, it will automatically influence the price. Try to evaluate the macro and microeconomic factors as it will help you to make better decisions.

So, investors should try to contemplate this fact before investing money. If you think that without being aware of the announcements of the big news, you can easily do trade, then, it is not possible at all. In the day trading, the positions are not so affected by the big announcements but it can shake the investor’s position. However, in position trading, a trader should have knowledge about these. They are also required to predict the upcoming circumstances correctly depending on the news.