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Donald Trump’s return to Office as the 47th President of the United States marks a significant political and economic shift, creating both opportunities and challenges in the forex market. 

Trumps second-term agenda, marked by aggressive trade policies, tax reforms, and deregulation, has the potential to impact global markets in complex ways, especially the foreign exchange market. Fear not; there will be plenty of opportunities to accompany any disruptions that the Trump Administration will bring.

One of Trump’s most critical economic agenda’s is his renewed focus on tariffs. As during his first term, Trump has emphasised targeting China, with plans to raise tariffs on Chinese imports by 10–15%, ultimately increasing tensions between the two nations.

Why does this matter?

China’s economy has direct and indirect influences on markets, primarily through global trade. In 2024, China's foreign trade reached new heights, with total goods imports and exports amounting to 43.85 trillion yuan (approximately USD $6.1 trillion), marking a 5% increase from the previous year. Exports grew by 7.1% to 25.45 trillion yuan, while imports saw a 2.3% rise to 18.39 trillion yuan.

The trade surplus expanded significantly, reaching a record $992 billion, driven by a surge in exports, particularly to the U.S. So, you can imagine how Trump’s focus on tariffs could affect this.

Other proposals include broad tariff hikes, with some extreme scenarios suggesting across-the-board levies of up to 10% or a staggering 60% on Chinese goods. Such moves, while aimed at protecting American industries, carry substantial implications for global trade flows – which will of course affect currency rates.

The U.S. dollar, often a safe-haven currency as we know it, has provided an impressive bull-run recently;

Figure 1-DXY (US Dollar Index) Daily Chart

There are essentially two scenarios:

1. A weaker USD
   
   In his first term as US President, Trump openly said the dollar (USD) was too high. And now, in his second term, he’s singing the same tune. This could provide some fantastic opportunities for us forex traders – especially when currencies such as the AUD and NZD are severely undervalued.
   
   
2. Continued dollar strength
   
   We could see further strength if global investors react to heightened uncertainty and anticipated inflationary pressures.

How to Trade Trump 2.0

Monetary and Fiscal Policy Signals

Look for Hedging Opportunities

Be Prepared and Adapt

News and Risk Management

Read Time: 8 Minutes

Throughout the year of 2024, we’ve observed some significant economic shifts and global events that have influenced market movements in their own way. Central bank policies were front and centre, with the Federal Reserve, European Central Bank, and Bank of Japan steering market sentiment through interest rate decisions and inflation management.

Geopolitical events further intensified market volatility, from the U.S. presidential election to regional conflicts and global trade renegotiations. These developments highlighted the forex market's sensitivity to political transitions and international agreements – providing some great trading opportunities along the way, on the back of the resulting volatility.

There were talks of central bank digital currencies (CBDCs) and the integration of AI-driven trading tools, which brought us both opportunities and challenges, fundamentally altering how traders approach the market.

Economic indicators like inflation trends, employment data, and GDP growth provided critical insights into currency dynamics, while liquidity patterns and institutional trading flows shaped the forex market 2024 behaviour.

Table of Contents

Central Banks & Economic Indicators

Economic indicators continued to determine forex market 2024 movements. Inflation trends, employment data, and GDP growth became focus points for traders in their market analysis. However, central banks were the driving forces behind many of 2024’s forex movements. One of the key influencers being the Federal Reserve (FED), which continued to balance inflation management with economic growth. Its policy decisions caused notable fluctuations in the dollar index.

In Europe, the European Central Bank (ECB) adopted a measured approach, focusing on stabilising the eurozone whilst observing varying economic growth rates. Its quantitative easing measures influenced liquidity trends and regional currency movements.

Across the Atlantic, the Bank of England faced challenges as the UK’s post-Brexit economy dealt with a persistent level of inflation.

The Bank of Japan remained committed to ultra-loose monetary policies, maintaining pressure on the yen – of which was a prime contender in the carry-trade space. Meanwhile, several emerging economies grappled with inflationary spikes, prompting central banks in countries such as Brazil and India to tighten policies.

Inflation remained a dominant theme, with central banks in developed and emerging markets adjusting their policies to manage rising prices. The U.S. inflation rate, in particular, was a critical driver of Fed decisions, indirectly shaping the dollar's global standing.

Whilst the U.S. demonstrated moderate growth, China’s slower-than-expected recovery impacted commodity-linked currencies like AUD and CAD. In addition, trade balance data highlighted the fragile state of international trade, further complicating currency dynamics.

Geopolitical Influencers

One of the year's most impactful events was the U.S. presidential election, which drove volatility across global markets. Policy discussions on trade agreements and economic reforms led to fluctuations in the USD, particularly against currencies like the euro and yen. With President Donald Trump still in the process of taking office, we can expect to see further geopolitical developments and forex price movements as we head into 2025.

Regional conflicts and political transitions also applied pressure on currencies. A key one being the tensions in Eastern Europe which influenced the euro's trajectory, whilst political instability in the Middle East affected oil-exporting nations' currencies such as the Russian Ruble and Canadian Dollar. In addition to this, trade agreements, such as renegotiations between key Asia-Pacific economies, created ripple effects in commodity-linked currencies like the Australian and Canadian dollars.

Forex Market 2024 – Behaviour Analysis

The forex market 2024 exhibited unique behavioural trends, characterised by pronounced volatility and evolving liquidity patterns. Traders observed spikes in volatility following key central bank announcements and geopolitical events, which created both challenges and opportunities.

Liquidity trends shifted significantly, with institutional trading flows dominating high-volume trading periods. Cross-border capital movements also surged, driven by divergent economic recoveries among regions. For instance, the U.S. attracted significant foreign investment due to its relatively stable economic outlook, bolstering the dollar’s strength against other major currencies.

Technological advancements further influenced market behaviour. AI-driven trading platforms improved trade execution efficiency, while blockchain technology introduced greater transparency in cross-border transactions. The digital currency evolution has added another layer of complexity, as traders adapted to the increasing integration of CBDCs into mainstream markets.

These behavioural insights reveal the dynamic nature of the forex market in 2024, emphasising the need for traders to remain agile and leverage advanced tools for navigating this ever-changing landscape.

A Technical Recap

In addition to observing the fundamental influencers of 2024, we can put it all into context by observing the daily chart for the year.

DXY 

EURUSD

As expected, the US Dollar movements were inversely correlated with the EURUSD reaching a high of 1.12140 and a low of 1.03332. 

AUD & NZD 

Our Aussie dollar has provided some fantastic trading opportunities this year – with range-bound strategies taking advantage of Q1 & Q2, before trend-following strategies amplified those returns with the increased volatility in Q3 & Q4, resulting in a high of 0.69424 for the year, and a low of 0.63482. 

Across the ditch, the Kiwi Dollar has performed very similarly, with a high of 0.63788 and low of 0.57971. 

GBP

The trend was your friend for the GBP this year – providing a long-term bullish trend, before reversing to a now-downward trend. A prior low for the year at 1.22996 was met with a resulting high of 1.34342 at the conclusion of the bullish trend. 

CHF &  JPY

Love it or hate it, the Swiss Franc was a trend traders’ dream this year, with a bullish trend providing a high of 0.92244, followed by a resulting down trend reaching a low of 0.83744.

We all know the story with the Yen this year, including multiple instances of intervention by the BoJ. Whether you’re taking advantage of the carry trade, or simply riding the trend, we saw textbook trending reaching a high of 161.951 and a low of 139.579 for the year. 

Conclusion – Lessons From 2024

The 2024 forex market has been a year of developments, from central bank policies, economic indicators, geopolitical events, to technological advancements...

Disclaimer: Economic conditions are complex and rapidly evolving. This overview provides an educational perspective based on available information as of late 2024.

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Read time: 3 minutes.

Indicative Dividend Adjustments for Indices: Week Starting February 3rd, 2025.

* Please note these figures are quoted in the index point amount and are subject to change

What is a dividend?

Dividends are a portion of company earnings given to shareholders. As indices are often composed of individual shares, an index dividend pays out based on individual shares proportional to the index’s weighting.

Trading on a CFD Index does not create any ownership of the underlying stocks, or an entitlement to receive the actual dividends from these companies.

What is an ex-dividend date?

An ex-dividend date is the cut-off date a share must be owned in order to receive a dividend. If an investor buys a share after the ex-dividend date, then they will not be entitled to earn or pay the next round of dividends. This is usually one business day before the dividend.

Do dividends affect my position?

Share prices should theoretically fall by the amount of the dividend. If the company has paid the dividend with cash, then there is less cash on the balance sheet, so in theory, the company should be valued lower (by the amount of the dividend).

Due to the corresponding price movement of the stock index when the ex-dividend date is reached, Fusion must provide a 'dividend' adjustment to ensure that no trader is positively or negatively impacted by the ex-dividend event.

How will the dividend appear on my account?

The dividend will appear as a cash adjustment on your account. If your base currency is different from the currency the dividend is paid out in, then it will be converted at the live FX rate to your base currency.

Why was I charged a dividend?

Depending on your position, given you are holding your position before the ex-dividend date, you will either be paid or charged the amount based on the dividend. Traders shorting an index will pay the dividend, whereas traders who are long the index will be paid the dividend.

Why didn’t I receive my dividend?

You may not have received a dividend for a number of reasons:

- You entered your position after the ex-dividend date

- You are trading an index without dividend payments

- You are short an index

If you believe the reasons above do not apply to your position, please reach out to our support team at [email protected] and we’ll investigate further for you.

Table of Contents

• Introduction
• Key Economic Indicators
  • Gross Domestic Product (GDP)
  • Employment Data
  • Inflation Rates
  • Interest Rates
  • Consumer Confidence Index (CCI)
• Interpreting Economic Indicators
• Essential Economic Indicators and Practical Application
• Synergising Economic Indicators with Technical Analysis
• Advanced Trading Techniques
  • Timing Your Trades
  • Integrating Indicators into Your Trading Strategy
• Conclusion

Key Economic Indicators

Gross Domestic Product (GDP)

GDP is the total market value of all goods and services produced within a country, reflecting its economic health.

A rising GDP often signifies a strong, growing economy, which can boost a nation’s currency due to investor confidence. Conversely, a declining GDP might signal economic trouble, potentially weakening the currency. For forex trading, GDP data can help identify long-term currency trends, particularly when compared across different nations.

Employment Data

Employment data is a major economic indicator with a substantial impact on currency values, particularly the Non-Farm Payrolls (NFP) data in the United States.

The NFP measures employment changes outside the farming sector, providing a snapshot of the U.S. job market. When job creation is strong, it suggests economic health, often strengthening the currency as investors and traders feel confident.

Weak employment figures can suggest economic issues, potentially leading to currency depreciation. Since employment is closely tied to consumer spending and economic stability, this data can be very valuable for traders.

Inflation Rates

Inflation, primarily measured by the Consumer Price Index (CPI), reflects the rate at which prices for goods and services increase.

Moderate inflation is generally healthy, indicating a growing economy. However, high inflation can devalue a currency as purchasing power declines. Central banks often adjust interest rates in response to inflation; if inflation is high, they may raise rates to control it, which can attract foreign investors seeking higher returns, thus strengthening the currency. Understanding inflation’s impact on interest rates and currency valuation is vital for forex traders.

Interest Rates

Interest rates are the cost of borrowing or the return on savings, set by central banks to regulate economic activity and influence currency value.

Interest rates are among the most influential economic indicators in forex. Central banks set these rates based on economic conditions, adjusting them to either stimulate or cool down the economy. Higher interest rates often attract foreign investment, increasing demand for the currency and boosting its value. Conversely, lower interest rates can make a currency less appealing to investors, leading to depreciation. For forex trading, interest rate changes and the policies of central banks (such as the Federal Reserve in the U.S. or the Reserve Bank of Australia) provide critical insights into likely currency movements.

Consumer Confidence Index (CCI)

The Consumer Confidence Index measures consumer sentiment and expectations regarding the economy.

High consumer confidence can indicate increased spending, which drives economic growth, while low confidence suggests economic uncertainty. CCI is considered a leading indicator, as consumer sentiment often precedes actual economic changes. When consumers feel positive about the economy, the currency may strengthen; when confidence drops, the currency may weaken. Forex traders use the CCI to anticipate changes in spending behaviour and overall economic direction.

Interpreting Economic Indicators

In forex trading, interpreting economic indicators requires understanding both individual data points and the relationships between them. Economic indicators can influence currency values in varying degrees, with some holding more weight than others. Traders must also consider correlations, as indicators like GDP and employment data often move together, giving a clearer picture of economic health.

One challenge traders face is managing contradictory signals. For example, strong employment data may suggest a strong currency, but if inflation is simultaneously high, it could lead to fiscal and monetary policy changes, ultimately impacting the currency differently. Weighing the significance of each indicator helps traders decide when to take action and which indicators align with their trading objectives.

Essential Economic Indicators and Practical Application

- For traders just starting with fundamental analysis, some economic indicators offer a straightforward approach to understanding market dynamics:

- Non-Farm Payrolls (NFP): Released monthly by the U.S. Bureau of Labor Statistics, NFP provides a quick look at employment trends, making it a critical indicator for traders.

- Consumer Price Index (CPI): CPI reflects inflation and purchasing power, directly influencing central bank policy and forex rates.

- Central Bank Interest Rate Decisions: Rate changes have immediate and often lasting impacts on currency valuation, making them a fundamental factor in forex trading.

You can find the details of every economic data event using our Economic Calendar.

Accessing timely and reliable economic data is crucial. Many traders use economic calendars, such as our one here, which provide release dates for upcoming economic data, allowing them to plan trades around these announcements. Economic calendars are invaluable tools for tracking data releases, setting alerts, and managing expectations for market volatility.

It's also important to be mindful of common misinterpretations, such as assuming that a single indicator will drive long-term trends. Forex markets are influenced by a multitude of factors, so it’s essential to view each indicator within a broader economic context.

Synergising Economic Indicators with Technical Analysis

Whilst economic indicators provide insights into a currency’s underlying strength, technical analysis offers real-time insights into price patterns and potential entry points. Combining fundamental and technical analysis enables traders to balance economic data with chart patterns, enhancing trade timing and precision. For instance, fundamental economic indicators can provide you with a long-term bias, and technical analysis can be used to find entries and exits in the direction of that bias.

Advanced Trading Techniques

Timing Your Trades

Timing is crucial when trading around economic data releases. Pre-release analysis allows traders to set expectations based on market consensus, whilst post-release strategies can help manage volatility once the data is out. Our Economic Calendar is an indispensable resource in this regard, assisting you in aligning trades with significant data releases and prepare for potential shifts.

Integrating Indicators into Your Trading Strategy

Developing a comprehensive trading strategy involves diversifying currency pairs based on each currency’s economic indicators. For instance, trading a U.S.-based currency pair based on NFP data, while trading an Australian pair based on the RBA’s interest rate decisions, can provide a balanced approach. Incorporating adaptive risk management around key data release dates can help traders mitigate the risks associated with high-impact news events.

Conclusion

Economic indicators are invaluable resources for forex traders, offering insights that can guide trading strategies and improve profitability. By understanding these economic indicators, you can better anticipate currency movements and make informed decisions. However, mastering these indicators requires continuous learning and constant observation.

Ultimately, leveraging economic data within a broader market analysis framework supports responsible trading practices and provides you with an additional source of information to make better trading decisions.

Remember: Successful forex trading requires a balance of economic insight, technical skill, and disciplined risk management. Stay informed, practice consistently, and adapt your strategies to ever-changing market conditions.

Read Time: 3 Minutes

A recent study by BrokerChooser has provided valuable insights into the complex world of online investment fraud, highlighting critical trends that every trader should understand.