"navigating Forex Markets Down Under: Tips For Maximizing Profit In Australia"

 "navigating Forex Markets Down Under: Tips For Maximizing Profit In Australia" - News trading is becoming increasingly popular among Forex traders because it offers opportunities to make large profits within a relatively short period of time. However, just as not all mayors are the same, not all macroeconomic news events have a similar impact on the market. For example, the German Flash Manufacturing PMI will always have a greater impact on the Euro compared to the French Flash Manufacturing PMI. If you have an economic calendar open, you can already see which news have the most impact on the market and others that you can easily ignore. For example, if you are trading the Australian Dollar, you can easily ignore the Conference Board's month-on-month Leading Index reading, as it will hardly move the price of AUD/USD or AUD/CAD, and even if it does, the movement is unlikely to change the prevailing trend. Compared to low impact news such as the CB Leadership Index, the Australian unemployment rate or the overnight cash rate set by the Reserve Bank of Australia (RBA) will have a large impact on the AUD/USD rate or any other currency pair that refers to the Australian Dollar. So, out of hundreds of news releases, how do you know which news events to keep an eye on? The good news is that, just like the Pareto principle, only a handful of news releases are responsible for most of the price movement for most currency pairs. Some of these news events are common to almost all currencies and if you can understand exactly how these affect your favorite currency pair, then you will be way ahead as a trader than most of novice traders who are just looking at a chart. #1: Unemployment Rate One of the main responsibilities of central banks around the world is to maintain a low unemployment rate. All major monetary policy decisions made by any central bank involve keeping it close to the Non-Accelerating Unemployment Inflation Rate or NAIRU. All major economies release unemployment rate statistics on a monthly basis and the lower it goes; the better the currency's valuation becomes. Partly because when the unemployment rate goes below NAIRU, which is always close to 4.0%, the central banks start to increase the interest rate to reduce inflation and cool the economy. This expectation of higher inflation is highly correlated with a higher interest rate and a low unemployment rate. Thus, the unemployment rate serves as a key indicator of future monetary policy decisions. Figure 1: Unemployment Rate of the United Kingdom and the European Union Currently, the unemployment rate in the EU is much higher than in the UK. Therefore, a simple analysis would indicate that the Euro would be valued higher than the British Pound (EUR/GBP). If you see a consensus forecast saying that the unemployment rate of the European Union would decrease next month, but it would remain unchanged in the United Kingdom, you can consider it as bullish news for the EUR/GBP. #2: Gross Domestic Product (GDP) Growth Rate Gross Domestic Product (GDP) is like the scorecard for a game. It measures the overall health of an economy and the higher the GDP growth rate, the stronger the currency. If you are trading GBP/USD, just by keeping an eye on US and UK GDP growth, you can easily figure out which way the pair would move in the coming weeks. Figure 2: United States and United Kingdom GDP Growth Rate In figure 2, it can be seen that the US GDP growth rate is generally close to the UK. However, one often outdoes the other. When you see that the US GDP growth rate is above compared to the UK growth rate, you can interpret it as a bearish sign for the GBP/USD. Likewise, if you see a forecast where New Zealand's GDP growth rate is going down compared to the UK, it would be a bullish sign for the GBP/NZD. Figure 3: The release of GDP data results in a sudden price advance #3: Consumer Price Index (CPI) The Consumer Price Index (CPI) measures the rate of inflation in the economy compared to a base year. You don't need to be an economist to understand how inflation affects a particular set of currency pairs, but a basic understanding would help you go the extra mile. You see, most central banks have a monetary policy that tries to limit the rate of inflation to a certain pre-defined range. When inflation goes above this range, central banks usually increase the interest rate to reduce inflation. Most central banks try to limit the inflation rate to 2.0% and use the CPI to measure it. However, the Federal Reserve, the US central bank, uses the Personal Consumption Expenditure Index instead of CPI. So, if you are trading the US Dollar and want to predict the future interest rate landscape, use the PCE index. However, any time you see a CPI growth forecast, it would be bullish news for the currency. For example, if the forecast for the UK CPI is 2.5% for the quarter, and the Australian CPI remains at 1.5%, then it will have a bullish effect on the GBP/AUD. #4: Overnight Interest Rate You see banks also borrow money from each other, but they do it overnight. Central banks try to influence the overnight rate by lending in the money market at their own overnight rate and it is an important tool in their monetary policy arsenal. Overnight interest rate is the main reason prices change in the market as it also affects the exchange rate. In fact, many traders think that the main purpose of fundamental analysis is to predict the future interest rates of major central banks. Although monetary policy is difficult to understand, even for ancient economists, the way to interpret this news is relatively easy. If you see a forecast that says the Federal Reserve is likely to raise the rate overnight, it is likely to have a bullish effect on the US Dollar. So, for example, if the Bank of Japan keeps its rate unchanged, it will be a bullish piece of news for the USD/JPY. #5: US Nonfarm Payrolls (NFP) Data The nonfarm payrolls figure measures the number of additional jobs added in the previous month in America's corporate sector, which is an important early indicator of the overall employment situation in the country. Figure 4: Impact of Nonfarm Payroll Data on the EUR/USD The US Dollar is the world's de facto reserve currency and the US Bureau of Labor Statistics (BLS) usually releases the nonfarm payroll data on the first Friday of each month . ). Although data release is not equal in all economies, you should definitely watch the US NFP as it will ultimately have a major impact on almost all currency pairs related to the US Dollar. If you see that the NFP forecast is higher compared to last month, it is bullish news for the US Dollar. So, for example, the bullish influence will be on the USD/JPY and bearish influence on the EUR/USD. #6: Organization of the Petroleum Exporting Countries (OPEC) OPEC is essentially a cartel at the international level. OPEC countries include 15 or so major crude oil producing nations such as Saudi Arabia, Kuwait, Iran, etc. Currently, OPEC countries control about 44 percent of the world's crude oil output and their decision to increase or decrease crude oil production can have a major impact. impact on the world energy market. There is a strong correlation between the currency market and the price of oil because of how resources are distributed. Therefore, it can affect the balance of trade (BOT) currency, and influence the psychology of the market. Because of this impact on oil prices, OPEC decisions can move the currency market because it affects production on a global scale and as Forex traders, you need to keep an eye on what OPEC is doing. You see, crude oil is quoted in US dollars because it is the de facto reserve currency. Therefore, the price of crude oil will affect any national currency of a country that has a large reserve of crude oil. In addition, a low energy price means that consumers will be left with more disposable income and can create demand for goods and services, which boosts sales. Therefore, when OPEC increases production, it tends to increase GDP growth in the US, which has a large oil reserve. But it may not have a significant impact on the Japanese Yen because Japan does not have large oil reserves. In this case, the USD/JPY would go up because the oil production cut will be bullish news for the US Dollar. Although it is difficult to analyze the impact of oil price on a specific currency, understanding and understanding the impact by reading detailed analysis can help you understand the pulse of the market and trade better to do.

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