How to gauge currency strength based on news event?

<p>Paying attention to the news can make you create a lot of mixed signals. If you know how to use trade/market news properly, the news can be hugely beneficial to you as a price action trader. The Forex market is very eventful, but without the news, it’s not. And, this goes for all the financial markets out there. News influences people’s bullish or bearish sentiment on a particular market, which in turn creates volatility as those people buy and sell. The way a market behaves following a significant event can be telling as to whether “the market” is bullish or bearish on that particular currency. This isn’t just about a currency falling on bearish news and rising on bullish news. It’s much more deeper than that.</p>

<p id="isPasted">When trading news, you first have to know which releases are actually expected that week. Second, knowing which data is important is also key. Generally speaking, the most important information relates to changes in interest rates, inflation, and economic growth, like retail sales, manufacturing, and industrial production:</p><p>1. Interest rate decisions</p><p>2. Retail sales</p><p>3. Inflation (consumer price or producer price)</p><p>4. Unemployment</p><p>5. Industrial production</p><p>6. Business sentiment surveys</p><p>7. Consumer confidence surveys</p><p>8. Trade balance</p><p>9. Manufacturing sector surveys</p><p>Depending on the current state of the economy, the relative importance of these releases may change. For example, unemployment may be more important this month than trade or interest rate decisions. Therefore, it is important to keep on top of what the market is focusing on at the moment.</p>

<p>The most common way to trade news is to look for a period of consolidation or uncertainty ahead of a big number and to trade the breakout on the back of the news. This can be done on both a short-term basis (intraday) or over several days.</p>