Exploring Volatitlity Top Economic Indicators Worth Watching
Having covered consumption and business sentiment indicators it is now time to shift our
focus to some additional economic indicators worth watching as well as what creates market
volatility.
Monetary policy updates
Communications from central banks are sometimes made public. These communications
may contain warnings or details about their future plans. Such statements frequently cause
the value of the corresponding currency to increase if they imply a tightening of monetary
policy.
Meeting outcomes
A central bank typically releases an accompanying statement with the announcement of its
interest rate decision, which usually includes an overview of the state and direction of the
economy and its future goals. Some refer to this as « forward guidance. » In general, the
currency of the bank may appreciate if its projections indicate that a thriving economy is
anticipated, and if its forward guidance indicates that the bank intends to tighten its
monetary policy.
Meetings minutes
Minutes from policy meetings offer in-depth perspectives on the contrasting opinions held
by policymakers at central banks, which can impact future expectations for rate decisions.
Speeches causing volatility
Members
Speeches by governors or board members of central banks may provide their personal
opinions on monetary policy or the status of the economy. If these opinions diverge from
expectations, this could lead to market volatility.
Finance ministers & more
By indicating adjustments to fiscal policy, spending plans, or the overall direction of the
economy, speeches by other policymakers, such as heads of state or finance ministers, can
have an effect on the markets. Prominent institutions such as the IMF or OPEC may also
make statements that sway market sentiment.
The list also includes changes in the price of gold and oil, the time frame for the release of
earnings reports, social unrest, political dynamics, and more. We will explore the various
definitions and terms that are common in the FX market jargon in the next session.