Reading macro for trading
The indicators that move currencies
5 min
Not all economic data is equal. A handful of releases move currencies far more than the rest, and knowing which ones to watch focuses your attention where it counts.
The heavy hitters
- Nonfarm Payrolls (NFP). The US monthly jobs report, released the first Friday of each month. It is the single most market-moving release in forex, because employment drives the Fed.
- CPI (inflation). Consumer-price data, in the US and elsewhere, directly shapes rate expectations — and rates drive currencies.
- Central-bank rate decisions — the FOMC, ECB, BoJ and Copom meetings covered earlier. The decision and the guidance both matter.
- GDP — the broad measure of growth.
- PMIs — timely surveys of manufacturing and services; a level above 50 signals expansion, below 50 contraction.
- Retail sales — the strength of the consumer.
The two concepts that tie them together
- Interest-rate differentials. Currencies flow toward higher yields. The gap between two countries' rates is the gravity behind a pair — the Selic-versus-Fed gap for USD/BRL, the Fed-versus-ECB gap for EUR/USD.
- The DXY as context. Always check the dollar index to know whether a move is about one currency or the whole dollar.
How to prioritize
Match the data to the pair. Trading EUR/USD means watching US and Eurozone inflation and the Fed and ECB. Trading USD/BRL means watching US data, the Selic and commodity prices. You do not need every number — you need the few that drive your market.
This content is for educational and informational purposes only and is not investment, financial, tax or legal advice. Trading and investing carry risk, including the possible loss of capital. Any performance shown by third-party tools is hypothetical and not a promise of future results. Do your own research and consider professional advice before making any decision.