The US dollar is the main market moving force in forex market. Every currency get affected bythe movement of US dollar as it is a global currency and thus every currency traders try to findthe direction of the US dollar by reading and interpreting the most valuable and importanteconomic reports which states the health of US economy which will in turn affect the strength ofUS dollar.Different Economic reports and there reading affect the market differently. Some reports haveless expected impacts and some have high expected impacts, this variation in the level ofimpact created by the report depends on various factors. In different market condition differenteconomic reports become the market movers for example inflation becomes the key focus ofmarket players in the time of US economic expansion and on the other hand at times of USeconomic contraction the consumer demand numbers become the focus of the market players.Below we had mentioned few important economic reports which have the capability to move themarkets. by reading and understanding them a currency trader can utilize the opportunitycreated by it which have a huge potential to boost the returns of the trader.
Nonfarm PayrollThe US Nonfarm payroll report or NFP is a key US employment report released by the U.S.Department of Labor and it shows the monthly job numbers. It release on the first Friday afterthe month of concern month. An increase in the jobs shows strength in the economy and adecrease in jobs shows a slowdown in the economy.This report also affect the interest rate decision as a healthy growth in the jobs indicate a steadygrowth in the economy which will boost the confidence in the market and it translates into thehigher interest rate. As we all know higher interest rates attracts foreign investments and ittends to support the US dollar as well which will create a overall positive sentiment in the marketin regards of US economy. On the other hand a consistent disappointing NFP report putpressure on the economy and the interest rates decision as well which will create a negativesentiment in the market and push the US dollar down.This indicates the importance of NFP report for the US economy as well as for the Forex marketas it is a very important data which have the capability to move the markets and also it give areading of future economic developments.
Trade BalanceThe trade balance report is released by the Bureau of Economic Analysis and the U.S. CensusBureau jointly. It states the import and export conditions and nominal trade deficit which is aintegral part of Trade Balance Report. Higher imports and lower exports translates to huge tradedeficit which is said to be bad for the concern country and higher exports and lower import onthe other hand translates to trade surplus which is supportive for the country’s economy.In currency market a trade deficit of a country will put bearish pressure on that country currencyfor example U.S trade deficit is not good for the dollar, as it indicates higher import and lesserexport in the U.S. and for imports the payment is done with the foreign currency which createsa surge in demand for foreign currency. On the other hand trade surplus indicates higherdemand of U.S. based good in foreign countries which creates higher exports and increase thedemand for the U.S. Dollar. The trade balance report is released six-weeks after the end of themonth it references near to mid of the month at 12:30 P.M. GMT
Gross Domestic ProductGross domestic production or GDP is a very important economic report which has a largeimpact on domestic equity market as well as currency markets. Gross Domestic Productionreport is released by The Bureau of Economic Analysis releases at 12:30 PM GMT on the last
day of each quarter.GDP shows the value of all the finished goods and services produced in a specific time in thatcountry. Good GDP growth shows strength in the country’s economy and a disappointing GDPnumber shows slowdown in the growth of the country’s economy. Steady growth in the grossdomestic production numbers also affect the interest rate decision and higher interest ratestends to attract foreign investors in the country which again supports the country’s economy andthat creates a good environment for the currency demand.
Industrial ProductionIndustrial production report shows the value of goods produced by various industries in thecountry which includes mines, factories and electric units along with publishers and printers insome countries. Industrial Production report is published by the Federal Reserve Board around16th of every month at 01:15 PM GMTA strong Industrial production (I.P.) number shows strength in the economy and it is tend to bebullish for the currency and a disappointing figure shows less number of goods produced in aspecific period which shows weakness in the market and it tends to put bearish pressure on thecurrency of that country.
Retail SalesRetail Sales numbers shows change in the inflation-adjusted sales at the retail level it is anaggregated measure of the sales of retail goods over a specific period. Positive growth in theretail sales numbers shows strength in the economy on the other hand disappointing numbersindicates a slowdown in economy.The Retail Sales Report is released monthly near 13th of every month by the Census Bureauand the Department of Commerce jointly at 12:30 PM GMT.The Bottom LineForex market is a very volatile market and because it is a global market it is affected by variousglobal events and economic reports. Every investor who wants to trade in the forex market haveto closely monitor the economic development in the U.S. market and the movement of U.S.dollar because it is a global currency and the majority of the trade happens in the Majorcurrency pairs which have US dollar in it .There are lots of factors which affect the value of U.S. dollar but tracking the importanteconomic events and reports like trade balance, GDP, nonfarm payroll, industrial production,retail sales and are few important economic reports which affect the movement of U.S. dollarand have a huge impact on the U.S. economy.