First rule: every news release answers just one question — "Did this country's economy get better or worse?" Better → its currency strengthens. Worse → it weakens.
Every release has three numbers
- Previous: last month's figure.
- Forecast: what analysts expect.
- Actual: what actually comes out.
The big secret: the market compares the Actual against the Forecast, not against last month. If CPI Forecast is 3% but Actual comes in at 2% → dollar weakens; gold, Bitcoin, and stocks rise.
The most important releases
- CPI: inflation. High → dollar strong. Low → dollar weak.
- Core CPI: same as CPI but excluding food and energy — the central bank weighs it more.
- PPI: factory costs, a preview of CPI.
- NFP: new jobs. High → strong economy, dollar up.
- Unemployment: joblessness. Up → weak economy, dollar down.
- GDP: the country's economic growth.
- Retail Sales: consumer spending.
- PMI: above 50 growth, below 50 contraction.
- Core PCE: the FED's favorite inflation gauge.
A real example (NFP)
Forecast = 150K, Actual = 310K → many people found jobs, the economy is strong, the FED keeps rates high. Result: dollar up, gold down, EUR/USD and GBP/USD down, USD/JPY up.
The golden rule of news
A new trader says, "CPI was good, so the dollar should rise" — then sees the dollar fall. Why? Because the market already knew the news and "priced it in," or the central bank's comments mattered more. The market is always one step ahead.
Next up, Lesson 4: gold, dollar, oil, stocks, and Bitcoin.