In the past few days, we’ve seen a variety of economic news, ranging from the slew of reports that came out today to the surprisingly gloomy ADP survey. However, these reports aren’t necessarily the most important. While they can help us make decisions regarding the future of our economy, they shouldn’t be the only source of economic news. The following are just a few examples of what to look for when reading economic news reports.
One of the first studies to examine economic news has focused on the ramifications of its coverage. A Yale University professor named Bryan Kelly explored the textual analysis of business news. He notes that one of the primary roles of economists is to measure the state of the economy and develop models that link the current state of the economy to future outcomes. While the economy is complex, the role of the economist is to understand how it works in order to forecast its direction.
The following are some examples of economic news that investors should follow. The release of these reports could affect the price of stocks and bonds. It would be foolish to ignore economic news, especially when it comes to the monetary policy. Purchasing managers’ index, housing starts, and GDP are examples of economic news. Those reports are all important for fundamental analysis. To keep your investment portfolio informed, it’s crucial to read as many economic news releases as possible.
Another great source for economic news is the Federal Reserve’s PPI, which is based on survey results of purchasing managers at major companies in the economy. The PMI reflects how companies are doing and what their plans are. The report also includes commentary on the economy’s growth and development. NPR also offers podcasts and RSS feeds to keep you informed of market changes. And if you want to follow the latest news on the economy, you can follow Jeffrey Kleintop on Twitter.
Aside from monetary policy, other economic news can influence the value of currencies. Interest rate decisions, employment reports, and GDP figures are considered important, as these can influence Federal Reserve policy. These important news releases, however, require traders to wait until the market reacts to them before trading. If the reaction is the opposite of what they were expecting, they might need to wait until the next day to make their next move. But the reward is well worth it.
Forex traders often use news trading to take advantage of these short-term movements. However, keep in mind that not all macroeconomic news events have the same impact on the market. For instance, a German Flash Manufacturing PMI has a much greater impact on the Euro than the French Flash Manufacturing PMI. So it’s essential to stay up-to-date on the news in order to be successful at forex trading. You never know when you’ll find a great opportunity to capitalize on it.
For example, the October and early November non-farm payroll numbers can move currencies up or down depending on what’s going to happen. If the news suggests that the supply is low or there’s an increase in demand, the price moves will likely follow suit. These factors are what make trading economic news so difficult, and the market’s volatility is often the primary cause of why the right moves don’t last. The lack of certainty can make it hard to sustain long-term gains in currency prices, which can prevent the best moves from being sustained.
There are a variety of downsides to news-based trading, however. You need to be an expert in fundamental analysis to get the most out of news trading. Because news-based trading relies on fundamental analysis, you may be required to hold positions overnight, which means carrying an open position for a longer period of time. Additionally, you may incur overnight risks and additional holding costs. This strategy may not be suitable for everyone. But if you have the skills, it’s certainly worth it.
One key issue with the current state of the economy is the Fed’s tightening of monetary policy. The Fed is attempting to reduce inflation without causing a recession. The monetary policy of the Fed is a complicated science. While it is largely a guesstimate, any change in the Fed’s monetary policy can affect the economy differently. Despite the fact that the Fed is trying to contain inflation, the recent gloomy economic news is likely to fuel investors’ fear of a recession.