Automated Forex Trading

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

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