News factors are one of the most powerful price-driving catalysts in the Forex market. Some investors call them the leading indicators. Whatever people call them, they are vital elements and should be considered before trading. While different releases like Retail Sales and Employment data show us the weaknesses and strengths of an economy, some are naturally subtle in their ways. To predict how different indicators will fare, some other leading indicators might help you by giving you a clue about it. It can also become the leading notion of the imminent effect caused by the releases.
Knowing these indicators will be helpful for traders as they help them see the bigger picture that goes beyond just prediction. Though some of you might think the factors we will discuss are not high-impact news, they have a long-term impact on the Forex market.
Business and Consumer Surveys
When inspecting various economic releases, traders should realize that nothing goes beyond the actions and habits of consumers. Retail sales indicate the direct measure of how much volume consumers are purchasing. Gross Domestic Product is the measurement of the spent capital by consumers and businesses. Employment is driven by the demand to make a product that customers buy more. Taking that note into account, you can realize that measuring the consumers’ point of view and their feelings about any product or asset will be beneficial.
Purchasing Manager Indices (PMI)
Other institutions are releasing different forms of PMI reports. All of these reports are important to various extents. However, the Flash or preliminary reports are the most important. You may wonder how!
The key factor that makes these releases unique is their timing. The flash reports are typically released mid-month or slightly later to measure that month’s condition considering the supply and purchasing executives. The higher the readings above 50, the better that month forms up for them.
Conversely, the lower the number from 50, the more negative responses the market receives. Forex traders need to be wary while assessing surveys and reports because they vary in time frames for release.
Companies conduct surveys to know consumers’ sentiments and feelings about a product. Most of the time, these surveys are reported about one or two weeks after the time they get completed. Whereas reports like Retail sales and others amid the crowd around two to six weeks later. It creates somewhat of a discrepancy. That’s why it’s an absolute necessity for all the different reports to match a timeframe.
Automotive industry
Governments are always slow in delivering their opinions or releasing their formal figures. Several instigators can cause such delays in making an opinion or providing a draft on the market condition or imminent actions. One reason can be their longing for accuracy.
Others might be related to bureaucracy. However, businesses seem to get a little more expedient. That’s why sales of the previous month’s vehicles are reported immediately after the month’s end, and the government figures are released later. There is an interesting theory behind the background of all this. That theory is that if vehicle sales are strong, it will demonstrate a good state for other consumerism’s strength.
These are only a few of the leading economic signifiers. Many other news have a similar impact and are equally important in trading. You have to help yourself research and collect information about them if you want to have your grip over them. The more you conceptualize them, the more you utilize the knowledge as your edge.
