Hello there,
I have a question. When reading news, what should we pay attention to, regarding forex?
Alex
Focus on economic indicators like interest rates, inflation, employment data, and GDP reports. Also, watch for political events such as elections and trade deals that can cause market volatility.
Expectations. Once data is released, it’s old. Institutional investors trade projections.
If the outcome is more favorable than expected, the herd will close their positions, often resulting in an opposite directional movement.
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You need experience to trade a news. Pick quantitative news, such as NFP, ISM instead of FOMC speech.
To have complete understanding, you need to know more about how macro economic work.
You need also noting the country’s stat. For me, I will take note global issue and country’s stat such as inflation’s rate, index currency, Stock Market Index, GDP, etc related to a country.
For EUR, I will monitor Germany, French, Italy and Spain only. Do these only if you want to be involved in trading seriously. Otherwise, you will feel kind of stupid to know these things without having the benefit. 
Besides reading the news, it is a good idea to check currency strength meter, provided by Babypips at this link:
Ok, this is going to require a bit of a lengthy answer, but let’s get it done…
Basically, you DON’T have to watch all the data out there from any given country.
Not at all.
That’s where I see lots of traders just getting fundamentals wrong.
Because they get overwhelmed by the amount of data and conflicting signals between numbers.
So, here’s what you need to pay attention to…
If it matters for the central bank, it matters for the markets.
When you look at the exact data that the central bank is looking at, you can have the “inside read” of what they will do next.
Because that’s what moves markets!
It’s NOT the data itself, but it’s the expectations of how the central bank will move next based on that piece of data.
Makes sense?
Ok.
Example…
It’s FOMC rate decision and we are looking for clues as to what the FED is looking at to decide their next move…
During the press conference a journalist asks Powell that exact question.
And he replies:
So…
What type of data you think is going to be important for markets?
Remember…
If it matters for the central bank, it matters for the market.
So?
Do you need to keep track of all economic indicators out of the US?
No!
You look at inflation, that’s the metric that will move the needle for the central bank to decide what to do next.
So CPI, PPI, PCE, inflation expectations, all measures that link to inflation.
And to be precise…
Here we are talking about identifying the exact economic numbers that are more likely to start trends.
Because there’s a difference there.
Between data that just creates directionless volatility, so moves that run out of fuel fast and fade back to pre event levels.
And moves instead that run for days and weeks.
That’s what you want to understand!
Because that allows you to first avoid getting trapped into false moves.
And second, getting some good trades in the direction of the macro context.
Now let me show you a few real examples…
You probably know already that through 2022 and 2023 inflation has been at the forefront of every single FED debate.
Just to give you some perspective…
At the September FOMC rate decision in 2019 the word inflation can be found mentioned 18 times. While in 2022 at the September meeting, the word inflation can be found 81 times!
And so that was the exact economic indicator that started A LOT of meaningful trends and moves for the Dollar in 2022 and 2023.
Just to take a couple of examples, in November 2022 the CPI was expected at 7.9% and it instead surprised lower at 7.7%.
Do you think that move ran out of steam quickly or it expanded for a good couple of days?
It held and expanded further!
But why?
Because that’s a piece of data that the FED put a lot of emphasis on and it printed quite outside of consensus.
Same but opposite story, in February 2023 where the CPI was expected at 6.2% and it printed at 6.4%.
See what’s going on here?
Again… the numbers that matter for the FED are the ones that trigger trends because they shape sentiments heading into the interest rate decision thereafter.
That’s the point.
I know it’s a complex matter that might not be clear at your first read so feel free to ask questions.
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Thank you 