Reports and News Events Affecting the Foreign Exchange Market

This analysis includes the major sources of News Events and Reports that tend to affect the international Forex Markets. The countries involved are United States, Eurozone Countries, England and Japan. The Forex currencies directly affected include EURUSD, GBPUSD, USDJPY, EURGBP, EURJPY and GBPJPY.


(A) UNITED STATES

Time of News Releases

Country

Currency

Time (EST)

US

USD

8:30 - 10:00

(1) FED and FOMC (Federal Open Market Committee)

According to the Federal Reserve Act of 1913, the Federal Reserve or FED is responsible for setting the United States monetary policy. The FED controls the US monetary policy using 3 tools:

  • Discount rate
  • Reserve requirements
  • Open market operations

The FED’s Board of Governors is held responsible for (a) and (b) {Discount rate and reserve requirements) while the FOMC is held responsible for (c) open market operations. The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight. Changes in the federal funds rate directly affects interest rates and the Foreign exchange rates and indirectly affects the US economic activity, employment, inflation etc. The FOMC meetings take place every eight (6) weeks or else eight (8) times in a year.

Along with FED’s action, Forex traders must pay attention to the statements at the end of each FED meeting. Nothing is said without a good reason. Simple words deriving from FED’s officials can reveal intentions as concerns future action (mainly as concerns interest rates). The Forex Markets love interest rate increases. Don’t forget that Forex investors and Carry Traders buy and sell Forex assets according to the level of interest rate differential between two currencies. An unexpected statement coming from a FED member can move any Forex Major 1,000 pips up or down in just a glance.

» http://www.FederalReserve.gov

(2) Beige Book

The Beige Book is released every six (6) weeks (eight times per year) and it is a summary of twelve (12) district reports. This report summarizes the information gathered by all Federal Reserve Banks including the current economic conditions by District using reports from Bank directors and interviews with economists, experts etc. The Beige Book summarizes this information by District and sector. The Beige Book may work as guidance to FOMC in changing the US monetary policy. Special impact on Forex Markets may have two reports, the New York’s Empire State Index and the Philadelphia FED report.

» http://www.FederalReserve.gov/monetarypolicy/beigebook/

(3) Gross Domestic Product (GDP)

The GDP measures the economic activity of an economy or an economic zone and it is considered the most reliable indicator for evaluating the economic health of every country in the world. Unexpected rise of the US GDP have by rule a tremendous positive impact on US Dollar. The reason is that when US GDP rises, the FED becomes motivated to increase the level of US rates. The US GDP is released in three (3) stages:

  • Preliminary GDP Report
  • Advanced GDP Report
  • Revised GDP Report

» http://www.BEA.gov/newsreleases/national/gdp/gdpnewsrelease.htm

(4) Consumer Price Index (CPI)

The CPI measures the level of prices of various goods and services during a certain period. Actually CPI measures the weighted average prices of a basket of goods and services. CPI reports are released by the Bureau of Labor Statistics and are considered very important as they have a serious impact on FED’s interest rates decisions.

» http://www.BLS.gov/cpi/

(5) Employment Reports (Non-Farm Payrolls)

The US Non-Farm Payrolls (NFP) are released in a monthly basis (1st first Friday of each calendar month) and play a huge rule as concerns the Forex market volatility. The NFP report indicates the number of new jobs that have been created or lost during a period. The more jobs created the better for the US Dollar and this is because two reasons.

  • First, the higher the employment figures the easier FED is going to raise interest rates.
  • Second, the more workers the more buyers in an economy and therefore the higher the expected growth.

There are some components incorporated in the employment reports that have a special meaning for Foreign Exchange analysts and that includes the average hourly earnings.

» http://www.BLS.gov/ces/

(6) Balance of Payments (BoP)

The balance of payments is released in a monthly basis and measures the value of imports versus the value of exports plus the current account flows. The Current Account Flows Report indicates the amount of capital flowing into an economy versus the amount of capital money flowing out of the economy.

» http://www.BEA.gov/international/

(7) US Retail Sales

The Retail Sales measure the aggregate sales of retail goods in the US over a month. The US Retail Sales reports are considered very influencing for Forex Markets as they consist a key component of the GDP and are released by the Census Bureau and the Department of Commerce. The Retail Sales report is released two (2) weeks after each month-end and includes in-store and out-of-store sales. The Retail Sales results are presented in two versions, one with auto sales and another without auto sales.

» http://www.CENSUS.gov/retail/index.html

 

 

(8) US Consumer Confidence

Consumer confidence measures the degree of optimism of US consumers based on the overall condition of the economy and their individual financial condition. Consumer confidence historically increases during periods when the economy grow and decreases during economic recession. But as consumers are not also aware of the US economic conditions, the consumer confidence is considered a lagging indicator of what happens next and especially as concerns the future stock market performance.

» https://www.conference-board.org/data/consumerconfidence.cfm

(9) Durable Goods Orders

The Durable Goods Orders is released monthly by Census and indicates new orders placed with domestic manufacturers. These orders include delivery of factory hard goods in near term or future.

» https://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf

(10) Industrial Production and Capacity Utilization

Industrial production measures the output (production) of the US factories, mines and general utilities. The capacity utilization is an indicator for estimating how much of US factories capacity is already being used. Note that if capacity utilization moves above 85% is a sign of an Over-Heated economy and could lead to increased inflation.

» http://www.federalreserve.gov/releases/g17/Current/

(11) Factory Orders

The Factory Orders indicate the level of new factory orders (dollar value) as concerns durable and non-durable goods. Factory Orders report is also known as “Manufacturers' Shipments, Inventories and Orders Report”. The report is released by Census in a monthly basis. The report is divided into four parts:

  • New orders
  • Unfilled Orders
  • Shipments
  • Inventories

» http://www.census.gov/manufacturing/m3/index.html

(12) Business Inventories

Business Inventories is an economic figure released by Census which measures the amount of inventories held by US retailers, US wholesalers and US manufacturers in Dollar Value. The greater the Business Inventories the weaker the US economy.

» https://www.census.gov/mtis/index.html

(13) Producer Price index (PPI)

The Producer Price Index (until 1978 called Wholesale Price Index) measures the average changes in prices received by US domestic producers for their output. The PPI report is released by the Bureau of Labor Statistics.

» http://www.bls.gov/news.release/ppi.toc.htm

(14) US Home Sales

Strong Home Sales reports indicate willingness of expanded spending and increased confidence in the economy. Moreover housing creates taxable income on behalf of the economy. The US Home Sales Report is released by the National Association of Realtors every 4th week of each calendar month and it is covering the aggregate number of existing homes sales along with average sales prices by region. 

» http://www.realtor.org/research-and-statistics/housing-statistics

(15) Construction Spending

The Value of Construction Put in Place Survey (VIP) is a monthly report first published in 1964 that informs investors about the aggregate dollar value of US construction work. The Construction Spending Report is released by Census and covers construction work on new structures but also improvements in existing structures. Both spending in public and private sectors is incorporated.

» https://www.census.gov/construction/c30/c30index.html


 

Zero Spread Account

 

(B) EUROZONE

Time of News Releases

Country

Currency

Time (EST)

Germany

EUR

2:00 - 6:00

France

EUR

2:45 - 4:00

Italy

EUR

3:45 - 5:00

The European Monetary Union (Eurozone) consist 19 countries members and includes alphabetically Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. As in the case of the United States the most important indicators for Eurozone include the Interest Rate Decisions, Unemployment Reports, Inflation, Retail Sales and Industrial Production.

(1) The Role of European Central Bank (ECB)

The European Central Bank is the most important financial European agency as it is responsible for the implementation of the Euro monetary policy. In other words ECB is responsible for maintaining price stability and the purchasing power in the Euro area. The most important decision of ECB is the monthly Interest Rate Decision. In overall, there are three (3) key monetary decisions taken by ECB:

  • The interest rate on the main refinancing operations (MROs)
  • The rate on the deposit facility
  • The rate on the marginal lending facility

» https://www.ecb.europa.eu

(2) Data from Important Eurozone Economies

Eurozone is formed by different-sized economies and therefore news and events released in certain countries have a special impact to the Euro exchange rate. Economic data deriving from Germany, France and Italy are considered very influencing for Euro.

(3) Eurozone Core CPI

The ECB goal is to maintain inflation in Eurozone at around 2.0%, in other words, ECB has defined price stability as "A year-on-year increase in the Harmonized Index of Consumer Prices (HICP) for The Euro Area of below 2%”. The German and French CPI play a major role as data from these two particular countries are considered significantly important for the Eurozone.

(4) German ZEW Survey

The German ZEW Survey monitors the general sentiment and confidence within Germany and EU. The survey is produced after interviewing 350 financial experts.

» http://www.zew.de/en/

(5) Eurozone Bond Auctions

These auctions are considered important as an indicator of confidence of the general Euro Area. Forex analysts keep a close eye to Italy’s and Spain’s Treasury Bills Auctions.

» http://europa.eu/efc/sub_committee/eu_calendar/national_issuance_information_(eu_27)/index_en.htm


 

 

(C) ENGLAND

Time of News Releases

Country

Currency

Time (EST)

UK

GBP

2:00 - 4:30

(1) The Bank of England (BoE)

The Bank of England sets and implements the UK monetary policy. The target for inflation according to BoE is 2.5% of the UK’s annual growth.

» http://www.bankofengland.co.uk/

(2) Inflation Reports (CPI, PPI)

Forex analysts focus on the Consumer Price Index (CPI) released by the Office for National Statistics.

» http://www.ons.gov.uk/ons

(3) UK Confidence & Sentiment

The Confidence & Sentiment Reports include the GFK Consumer Confidence and Nationwide Consumer Confidence Surveys. The main difference between these two surveys is the time period used:

(i) The GFK reflects events of the previous twelve (12) months, and expectations for the following twelve (12) months

(ii) The NCCI reflects the current situation and current expectations for the next six (6) months

Other reports that are considered important for the British Economy and GBP, as in the case of US and Eurozone, include GDP, Balance of Payments, Unemployment Reports, Retail Sales and etc.


 

 

 

(D) JAPAN

Time of News Releases

Country

Currency

Time (EST)

Japan

JPY

18:50 - 23:30

(1) News Releases from Important Japanese Institutions

Bank of Japan (BoJ) is Japan’s Central Bank and it is responsible for implementing the Japanese monetary policy using tools such is the short-term interbank rate and overnight call rate. Note that the difference between the Japanese 10-year JGB yields and US 10-year Treasury notes is considered an important driver as concerns the USDJPY rate.

» https://www.boj.or.jp/en/

The Japanese Ministry of Finance (MoF) is considered also very important as it tends to interfere via regular statements

» http://www.mof.go.jp/english/

Finally the Ministry of Economy Trade and Industry (METI) plays an important role too as it controls the Japanese industries by defending the competitiveness of Japanese businesses.

» http://www.meti.go.jp/english/ 

(2) Japan’s National CPI and Tokyo Core CPI

The Japanese National CPI is released by the Japanese Statistics Bureau. The Tokyo Core CPI is considered a leading CPI indicator and it is released 1 month prior to the National CPI.

» http://www.stat.go.jp/english/ 

As in the cases of US, Eurozone and UK, other reports that are considered important for the Japanese Economy and JPY include GDP, Balance of Payments, Unemployment Reports, Retail Sales and etc.

 

Reports and News Events Affecting the Foreign Exchange Market

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