Learn To Use The Economics Calendar To Trade Forex & Oil & Gold
When an economic release comes out, markets can react violently as traders enter and exit positions based on the new information.
Some news releases are more important than others. Non-farm payrolls (released on the first Friday of each month), CPI (inflation figures) and central bank announcements typically move the needle more than most, and these events see the sharpest price spikes.
There is good reason for this. Central bank announcements like rate hikes directly affect the money supply which has a major bearing on the economy, while CPI figures or unemployment numbers can influence central bank policies.
These days, sophisticated algorithms are able to process news releases in a blink of an eye and move the market accordingly. Financial markets therefore adjust quickly to the new information. Even so, the biggest news releases create opportunities in the market because they can cause long lasting price moves and momentarily distort the efficiencies of the market.