Traders must know Forex Factory right?
Yes, that's it. If you want to know about the data that will be released, you must look at Forex Factory first because it will affect the currency market.
However, there are also traders who do not know or do not understand how to read the data provided on the platform.
Come here, we explain!
On the economic calendar, the data released will depict news events with high (red), medium (orange) and low (yellow) impact.
Usually high impact data will have a big impact on the movement of the currency.
Referring to the picture above, the event for the FOMC policy meeting results is red, which means it has a big impact on the US dollar currency. So, investors can expect big movements in the US dollar and currency markets.
While the speech of the Secretary of the Treasury of the United States, Janet Yellen, is orange, which means that it has a moderate impact on the market.
Then, the US current account data is yellow which means it has little or no impact on the currency.
Next, look at the picture above again. What does 'actual' mean; 'forecast'; 'previous'?
Actual or real, is the actual or current reading of the data that was just released that day.
Forecast or prediction, is the expectation of the data that will be released.
While previous or before, is the reading recorded before (week, month, quarter).
If the actual reading recorded is higher than predicted or previously, it can have a positive impact on the currency.
However, not all data has the same impact on the market, as it depends on the type of data released.
For example, unemployment claims data. If the reading recorded is higher than expected or previously, it has a negative impact on the USD currency.
This is because, rising unemployment claims mean many are out of work, therefore it is not good for the US economy.
On the other hand, if the reading is lower than expected and the previous reading, it has a positive effect on the USD currency.
In conclusion, traders need to know how to read economic data at Forex Factory to help anticipate the impact of a currency.
