Remember the golden rule: traders have different ideas and convictions in how they analyze the market information released, so prices cannot move 100% based on that information.
Economic data includes data or reports issued at specific times (weekly, monthly, quarterly) that reflect the economic conditions of the country in which these data is issued. Among the most important data releases are inflation data, non-farm payrolls, unemployment rates, gross domestic product, and many more.
Large fluctuations usually occur in prices at the moment of issuance of these data, as people interpret the information in different ways.
When economic data is released, the reading must be compared to the previous reading and the expected reading, as well as most of the previous readings. Analysts advise that when trading on the day that important news will be issued, to reduce the volume of transactions due to the large fluctuations that occur in prices immediately following the data releases.
In addition to knowing what specific data releases mean, traders should understand its impact on the financial instruments they trade on in order to make better-informed decisions.
The content published above has been prepared by CFI for informational purposes only and should not be considered as investment advice. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell. The information provided does not have regard to the specific investment objectives, financial situation, and needs of any specific person who may receive it, and is not held out as independent investment research and may have been acted upon by persons connected with CFI. Market data is derived from independent sources believed to be reliable, however, CFI makes no guarantee of its accuracy or completeness, and accepts no responsibility for any consequence of its use by recipients.