Main Economic Factors That Have An Effect On The Forex Market

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By Adrian Cruce

Buyers and sellers operate in the Forex market every single day, trading billions or trillions. Forex can only be described as a truly active global marketplace. One of the really important things that first have to be learned by traders is what economic factors will have an effect on Forex markets. Obviously, so many interesting factors have to be mentioned and taken into account by traders. With a world that encourages Forex trading on the go, do be sure that you think about the following before making investments.


If you look at CMC Markets, you instantly notice that macroeconomic factors stand out as the main influencers in Forex. They are influencing trader decisions and do decide currency value in time. A nation’s economic health stands out as a huge currency value factor. However, information and events in economy can change daily, leading to the non-stop nature of the Forex market. You always need to be aware of what happens at a global scale if you want to trade currencies.

Capital Markets

Capital markets can only be described as the highly visible factors that can be taken into account in order to see the health of the economy. Bond and stock markets are noticeable. Media coverage is quite high at the moment and we can easily get information about all dealings of government entities, institutions and corporations. Capital markets do not show many events that are missed.

International Trading

Trends and trade levels between nations also highly influence the Forex market. These trade levels are basically a proxy that shows a nation’s goods demand. If there are services or goods that are currently in a high demand at an international level, currency appreciation is guaranteed. Deficits and surpluses in trading will always exemplify the competitive standing that the nation has in worldwide trading.

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Political Conditions

The nation’s political landscape will heavily influence economic outlook and currency perceived value. A Forex trader will always have news alerts set up to gauge moves in political scenes. All government decisions will influence Forex decisions. At the same time, elections will need to be analyzed since exchange rates can react favorably to one party and totally unfavorably to another party. Brexit stands out as the best example of this. The event heavily influenced GBP value in connection to EUW.

Economic Releases

In Forex trading we look at economic reports as being the backbone of the playbook used by the trader. Economic report calendars are really important since the market is really fast-paced. One of the most obvious of the economic reports is GDP. It is a baseline of the strength and performance of the economy of the entire country. However, this is an indicator that is lagging so we have reports on trends and events that did happen till the issue moment.


We can say that economic factors will drive Forex markets and they will be analyzed as economic strength indicators. A country’s economic outlook has the highest influence on currency value. This practically means that when you know indicators and factors that can be analyzed in connection to economy you have an advantage in Forex trading.