Forex News Trading and the Economic Calendar

Trading Forex using the economic calendar is one of the most profitable ways of day-trading.

 

Volatility is getting extreme during important economic releases and Forex traders who can understand the basics of fundamental analysis can generate profits using reasonable capital leverage. Economic news and updates which are released during session overlaps enjoy even higher volatility.

 

Forex Economic Calendar

A Forex economic calendar consists of all major economic releases from countries whose currencies are included in the major currency pairs. These countries include all the Eurozone countries, the United States, Japan, United Kingdom, Canada, Australia, and New Zealand. Usually, economic releases include also China, as the Chinese economy plays an important role in our global economy. As concerns Eurozone, there is an extra weight regarding news releases coming from Germany and France and especially Germany. Other economically important Eurozone countries include Italy and Spain.

 

Risks of Forex Calendar-Trading

Although calendar-trading is one of the most profitable ways to trade Forex there are some important risks which traders need to understand and to avoid constantly:

1. Volatility and Spreads

As volatility gets extreme during news releases the spread between Ask and Bid is hitting red. For example, if a Forex Broker offers EURUSD at 1.3 pips typical variable spread, during news releases the spread may come up to 2.0 pips or even more. When the spread is increased the total trading cost is increased and that is bad news. In addition, price re-quotes may increase the total trading cost further. The solution is to trade with reliable Forex Brokers offering trading without re-quotes and to use spread control.

Read more: Forex Economic Calendar

GBPUSD News Trading

The British Pound Sterling against the United States Dollar (£/$) –Nickname Cable

CENTRAL BANK	BoE	FED
FOREIGN CURRENCY RESERVES	10.135 Million USD	41.901 Million USD

GBPUSD is the third most traded currency pair in the world after EURUSD and USDJPY and accounts about 17% of the total Foreign Exchange daily volume. GBPUSD is traded most during the time overlap of the London and New York sessions.

 

GBP Important Economic Releases

(1) Interest rate decisions » Bank of England

(2) UK GDP - GDP Growth Rate in the United Kingdom is reported by the » UK Office for National Statistics.

(3) UK CPI – the UK Consumer Price Index is also found as the Harmonized Index of Consumer Prices (HICP). The inflation rate in the United Kingdom is reported by the » UK Office for National Statistics.

(4) Inflation Letter – In any month, if the UK inflation deviates from the target by more than 1%, the Governor of the Bank of England is required to write an open letter to the Chancellor explaining the reasons for this deviation and to propose an action plan.

(5) UK Unemployment (UK Claimant Count Change) –It is released monthly by the UK Office for National Statistics.

(6) Trade Balance -Balance of Trade in the United Kingdom is reported by the » UK Office for National Statistics.

(7) UK PMI (Purchasing Managers Indices) –It is a report about the sentiment of the UK’s purchasing managers. It includes Manufacturing, Services, and Construction. Manufacturing PMI in the United Kingdom is reported by the » Markit Economics.

(8) Retail Sales -Retail Sales from Month to Month is reported too by the Office for National Statistics.

Read more: GBPUSD News Trading

EURUSD News Trading

The European Currency against the United States Dollar (€/$) –Nickname ‘Fiber’

CENTRAL BANK	ECB	FED
FOREIGN CURRENCY RESERVES	51.373 Million USD	41.901 Million USD

EURUSD is the most traded Forex pair in the world counting about 28% of the total volume of the Foreign Exchange market. The US Dollar is the largest reserve currency in the world and EUR is on the second position.

 

EUR Important Economic Releases

(1) Interest rate decisions » European Central Bank

(2) GDP Releases -GDP Growth Rate in the Eurozone is reported by» Eurostat.

(3) Eurozone CPI –The level of CPI is highly influenced by the level of the German and French CPI. –The Euro CPI is reported by » Eurostat.

(4) Unemployment - Reported also by the Eurostat.

(5) Eurozone Trade Balance -Balance of Trade in the Eurozone is reported by » Eurostat.

(6) ZEW Economic Sentiment (Germany) –Germany is for sure the leading economy in Eurozone. The German Economic Sentiment ZEW gives a reliable indication of the prospects of the Euro Area’s economy. The » ZEW economic research center

(7) Flash Manufacturing, Services, and Construction PMIs –Several domestic reports but the aggregate Industrial Production in Eurozone is reported by Eurostat.

(8) Italian, Spanish, and other Southern European Bond Auctions –As the debt crisis in Europe isn’t over these Bond Auctions can indicate the level of credibility of the Southern European Countries.

» Italian Bond Auctions | » Spanish Bond Auctions

 

USD Important Economic Releases

(1) Interest rate decisions » FED releases

(2) GDP releases

The GDP figures are released by the Bureau of Economic Analysis on the last day of each quarter at 8:30 AM EST.

(3) Non-Farm Payrolls

It is released by the » US Bureau of Labor Stats on the first Friday after the conclusion of the month of reference at 8:30 AM EST.

(4) National CPI

(5) Retail Sales

Retail sales are released by the » Census Bureau and the » Department of Commerce on a monthly basis (previous month). The figure is released about the 13th of each calendar month at 8:30 AM EST.

(6) Trade Balance / Current Account

The Trade Balance is released by the » Bureau of Economic Analysis -BEA every 2 months. The date is 6 weeks after the end of the month of reference at 8:30 AM EST.

(7) Industrial Production

The Federal Reserve Board announces the US industrial production around the 16th of each calendar month at 9:15 AM EST

(8) New Houses

Read more: EURUSD News Trading

USDJPY News Trading

The United States Dollar against the Japanese Yen ($/¥) –Nickname ‘The Yen’

CENTRAL BANK	FED	BoJ
FOREIGN CURRENCY RESERVES	41.901 Million USD	1.199.000 Million USD

USDJPY counts about 17% of the total volume activity in the Foreign Exchange market. It is a very dynamic pair with straightforward moves. The role of the BoJ is decisive as concerns the USDJPY exchange rate given the extreme BoJ foreign currency reserves which count 1.2 trillion USD. The BoJ has a history of significant interventions in the JPY currency market.

 

USDJPY Key Concepts

◙ Japan has one of the highest Trade Surplus against the US.

◙ Japan has one of the highest Investment & Savings Rates in the world.

◙ The Japanese Economy has one of the highest Public Debt to GDP ratios worldwide (225%). But this is internal debt and not external debt. The US public debt counts for about 103% of the GDP.

◙ The Japanese Yen offers one of the lowest interest rates worldwide and that is why it is used traditionally as a borrowing currency (along with CHF).

◙ There is a historic linkage between USDJPY and the US stock-markets, as stock traders tend to borrow Yen to buy US stocks.

 

USD Important Economic Releases

(1) Interest rate decisions » FED releases

(2) GDP releases

The GDP figures are released by the Bureau of Economic Analysis on the last day of each quarter at 8:30 AM EST.

(3) Non-Farm Payrolls

It is released by the » US Bureau of Labor Stats on the first Friday after the conclusion of the month of reference at 8:30 AM EST.

(4) National CPI

(5) Retail Sales

Retail sales are released by the » Census Bureau and the » Department of Commerce on a monthly basis (previous month). The figure is released about the 13th of each calendar month at 8:30 AM EST.

(6) Trade Balance / Current Account

The Trade Balance is released by the » Bureau of Economic Analysis -BEA every 2 months. The date is 6 weeks after the end of the month of reference at 8:30 AM EST.

(7) Industrial Production

The Federal Reserve Board announces the US industrial production around the 16th of each calendar month at 9:15 AM EST

(8) New Houses

» US Calendar Outlook

 

JPY Important Economic Releases

(1) Interest rate decisions » Bank of Japan

(2) Japanese GDP release

(3) Japan’s National CPI

(4) Tokyo Core CPI (released 1 month prior to National CPI)

(5) Trade Balance

(6) Current Account

(7) Industrial Production

» Japan’s Calendar Outlook | » Economic Stats

Read more: USDJPY News Trading