All of fundamental analysis ►Economic calendar
The economic calendar, market news and events
Economic calendar is a tool used by all traders in all markets - whether stock options market, currencies or commodities. The Economic Calendar is a calendar with regularly published economic indicators.
The logical purpose of its use is to monitor the release of important macroeconomic indicators that may substantially affect the price increase or drop in on her, and to ignore this element can not be.
The fact that important economic news affecting the Forex trade market, probably every trader knows. News are part of the fundamental analysis of the market, but the fundamental factors are important components of the formation of prices in the currency market.
Probably each market are new at least once observed the following picture: the price chart for no reason at all jumped up, not breaking 20 points, as much as 120 in only some 5 minutes. What happened? Sure, blame the news affecting the market, and a blind eye to the obvious trading even just using two or three technical indicators can not.
Economic news - it's a tool of analysis in the Forex market, as well as technical analysis or display. Their impact should be considered together with the signals from other instruments. After all, the news did not cancel the forecast of technical tools, they corrected them, or confirm (with the exception of global, emergencies). Given the time the release of economic news and the possible behavior of the market at a particular event, the trader fails to trade with less risk and with greater efficiency.
When working with a calendar of economic news enough to know only about the exit time news. It is equally important to understand how it will affect on the currency.
The degree of importance in the economic news calendar
News in the economic calendar vary in order of importance, impact on a particular currency, etc. Some traders are trading at the time of the news release, some on the contrary try to avoid them. In any case, it is important to know the time, the degree of importance, impact and significance of the news.
The publication of important economic events and news, as a rule, generates high volatility in the currency market.
Always pay attention to the behavior of the market before the news publication. If the market is quiet and minimum volatility, which means that the players are waiting for precisely this news and, most likely, after its publication, we will see serious movement.
Economic news should be divided into positive and negative, depending on which of the currencies you are trading, for example if you bought the dollar and is reported on the normalization of the economic situation in the United States, then such news for you will be positive, as the dollar definitely go up.
The greatest interest is news to change the interest rate of the leading banks of the world: ECB, Bank of England and US Federal Reserve, GDP, Non-Farm Payrolls (indicator of unemployment outside the US agricultural sector), data on the developed countries, the trade balance, inflation data - they cause rapid price movements.
How to read the economic calendar
In the calendar, as a rule, marked the most important news affecting the Forex, - on them and need to pay attention. And not even important quantitative indicators of unemployment or employment in the agricultural sector: important difference between the predicted value and the actual. If the forecast is justified, the FX will likely not react to this news. And if the forecast will be radically different from the published values, then everything is possible in Forex.
How to work with the economic calendar?
When working with the Forex economic calendar is fundamentally important to specify the time zone in the calendar settings (Moscow - GMT +4: 00, DST Off.).
Please note that the news release time in the calendar for the specified time zone, which is set by default. But you can and should ask for your calendar time zone, to avoid any problems and misunderstandings on the economic news release time.
All economic calendars have the same structure and consist of the following options:
Time - release, the news.
Currency - the currency (country), in which the news outlet.
Importance - importance of the event. The most important factor, which should pay attention in the first place. Exit important news can cause the most volatile movement in the market.
Event (figure) - the name of economic performance. For me, an important condition for the choice of the economic calendar was the presence of the commentary on economic indicators as well as the opportunity to see how the value of the indicator on the story.
Period - how often beyond economic indicator (once a month, quarter, year ...).
The previous, forecast and actual value - as the name implies the predicted value, the value for the previous period and the actual value. It is important to understand that the predicted values and actual values can differ radically. You should also pay attention to the fact that the yield of important news the market can begin to work out in advance, as it were, "anticipation" of the news.
Tactics traders trade using the economic calendar
If ordinary traders try to catch the news motion, experienced traders act differently: time to forex news they only need to catch up this time ... to get out of the market, without risking anything. Rapid pulse price movements caused by the news, as a rule, can hardly be predicted, and therefore trade on any trading system is likely to bring a loss.
To date, related to the trading strategy on economic news can hardly be called unique. Stockbrokers divided into two camps.
One part of the foreign exchange market participants said "trade on the news" a wonderful way, allowing in record time to get more profit enough. Another part relates to the traders' trading on the news "very negative and cautious, considering the Forex market news only platform, which is based analyst of the currency market.
The most important news on the economic calendar
Macroeconomic indicators - statistical data that indicate the current status of separate spheres (industry, employment, market, trade, etc.) in the national economy. These indicators are published regularly at certain times by government agencies or private companies.
When used properly, these indicators can be an invaluable aid to any trader.
After the publication of the indicators can be seen increased market volatility. The degree of volatility is determined by the importance of a particular index, so it's important to understand how light the most significant and what it displays.
The most important economic data include the following:
Gross Domestic Product (GDP)
Gross domestic product refers to the aggregate value of all goods and services produced in the country or economic region. The figures are usually released on a quarterly basis, and each year, inform the traders as to whether the economy is expanding or contracting. GDP, which is lower than in the previous version, points to an economy that is shrinking, a higher GDP than previously reported, shows the growth of the economy. In the case of the EU, the European GDP, as a rule, does not create as much impact on the market because France and Germany, which release their GDP figures in advance. It should be borne in mind for all the indicators that have a national release, followed by pan-European report.
Announcement of interest rate
The interest rate plays the most significant role in the changes in exchange rates on the market of conversion operations. As institutions that set interest rates, central banks are the most powerful driving force. The interest rate determines the flow of investments. Because currencies represent economies in different countries, the differences in the interest rate affects the notional value of currencies in relation to each other. Changing interest rates by central banks can cause volatility and fluctuations in the currency market. In the area of trade in the forex accurate speculation the central bank may increase the chances of successful traders trade.
Beige Book - an economic review of the US Federal Reserve, which is published eight times a year; on the basis of accounting documents 12 regional banks, included in its composition. The official naming of the document "Summary of Comments on the current economic situation in the Federal Reserve districts."
A large number of financial experts and investors, including traders and brokers Forex currency market, according Beige Book an important tool for check the general stability of the economy. The report may change the market, especially if it contains the results do not fit together with the expectations of analysts. As we know, on the platform of the international prices of the Forex market, begin to change after the release of the Beige Book.
Despite this, the Beige Book does not give complete information for decisions in carrying out commercial activities in the market. The book shows the different areas of economic data, and, despite the fact that they may be true, actually give only superficial information.
The index of consumer confidence
Consumer Confidence Index (Consumer Confidence Index, CCI) - an indicator of the degree of consumer confidence or certainty about the current and future state of the national economy.
The index is calculated on the basis of survey data of 5000 the average American family as a relative measure of the total number of positive and negative responses to the total number of responses. The indicator includes two estimates: the current state of the economy and its development prospects.
The consumer confidence index refers to a group of leading business indicators. The traditional use of this indicator concerns forecasting the overall state of the economy and of employment trends in the sphere of development of the country.
The growth index of consumer confidence indicates positive dynamics in the country's economic policies and a favorable impact on the dollar. However, in most cases, the indicator does not have a significant impact on the financial markets, because its value is rather arbitrary and does not necessarily reflect the actual state of the economy. The exception is during periods of economic crisis, accompanied by the panic of the population. At such moments, the consumer confidence index becomes extremely significant.
State fiscal and monetary policy
Stabilization of the economy (ie, full employment, control inflation, commensurate with the balance of payments) - one of the most important goals of any government, which is achieved by controlling the fiscal and monetary policy. Fiscal policy relates to taxes and costs, and monetary policy - to the financial markets and the possibility of credit, cash and other financial assets.
Trade Balance (Trade Balance)
It measures the difference between the value of exported and imported goods and services of a country. The indicator displays readings on the output graph in the middle of each of the second month after the reporting period. Periods can determine the economic calendar.
Usually the term is expressed in millions of units of the currency under consideration, as well as an annual percentage change, statistics on the trade balance is obtained by comparing the value of imports and exports within the specified time period. If the index is negative, the more goods imported than exported, it is called a trade deficit. If the figure is positive, more goods were exported than imported, and this is known as a trade surplus. Reports of the trade balance is extremely important events, since they play a central role in the country or region's balance of payments. These reports are particularly useful for forex traders, as they provide valuable information about the strength of the currency.
Trade balance - this index is the ratio of the total amount of money leaving the United States with a number of applicants. Historically, the United States has a trade deficit, which means that each fiscal quarter of the country leaving more dollars than it receives. When this number is lower than expected, that is, the deficit is greater than expected, this is a sign of a weakening dollar. Conversely, if the figure is positive, a good sign for the dollar.
Employment indicators reflect the overall state of economic and business activity. In order to understand the functioning of the economy, it is important to know how are created and eliminated jobs, the percentage of the labor force engaged in and how many people claim to unemployment benefits. It is important for the measurement of inflation to see how rising wages.
Retail Sales (Retail Sales)
Retail sales reports are important for traders as they provide invaluable information about counties or regions of overall economic health. This is due to consumer spending which constitute the vast majority of economic activities or areas of the country. Positive retail sales affect many other aspects of the economy, they provide valuable insight into consumer confidence, as well as closely related to the health of workers in the retail sector. If the figures are more positive than expected, they will inevitably lead to the strengthening of the currency under consideration.
Retail sales figures are published monthly. These indicators are very important because they show the total amount of consumer spending and the success of retailers. This report is an interim measure of the vast nature of the consumer spending, which varies from season to season. It can be used to predict the more important indicators, are calculated with a lag, and to render the changes in market dynamics.
Producer Price Index (PPI - PPI)
It measures the monthly change in prices for goods and services sold by producers. This is an important economic report showing an increase in prices for goods and services, showing the economic inflation. This is because the higher prices at the end of the supply are transferred to consumers. The impact of this report is increased when the PPI figures are released on the eve of Consumer Price Index, as both reports are highly correlated.
Purchasing Managers Index (PMI)
PMI is a monthly report that shows the economic outlook of purchasing managers in various sectors, including manufacturing, services and construction. The figures were obtained through a survey of a representative selection of influential purchasing managers, the result is a number from 0 to 100, if it is below 50, then the prospects are negative, it means a reduction in the surveyed sectors and has a negative impact on the given currency. If greater than 50, then the prospects are optimistic, indicating growth in the sector, a healthy economy and the strengthening of the currency of that country or region.
Industrial production indices are also important for traders, because industry accounts for a quarter of all economies, which are provided in the major currency pairs. These figures are estimated change in total industrial output value of the country or economic region. This includes factories, mines and utilities. Healthy industrial production affects many other aspects of the economy, including employment, consumer spending and the effect of currency. When industrial production is higher than the forecast, traders can expect the growth of the considered currency, and when below, they can be expected to fall.
Durable Goods Orders (Orders for durable goods)
It keeps track of changes in the total value of orders placed for durable goods from manufacturers on a monthly basis. Durable goods are items such as household appliances and cars that have a shelf life of at least three years. Orders for durable goods have a significant impact on the US economy, as they are directly related to the increase in industrial activity. Health records (ie, one in which the performance is better than expected) is good for the US dollar. As in the case of the CPI, Core Durable Goods report is one of those traders who are paying very close attention. This is because it excludes data relating to the much more volatile sales of transport goods, such as cars and airplanes.
Existing Home Sales (existing home sales)
The volume of sales on the secondary market (rather than newly constructed buildings) dominated sales in the US, which account for the vast majority, it is by far the more important components of the real estate sales report. The publication of each month (though in annual format), he describes the changes from month to month in the number of existing homes sold in the United States. Homes sales figures affect many other areas of the economy, so these figures are closely monitored by the merchants. Positive numbers are good for the USD, negative numbers have the opposite effect.
Building Permits (Building Permit)
This monthly report is another economic indicator, which is closely monitored by traders. Approval of resolution for the construction of one of the first steps that must be taken before starting the construction of a new building. As such, this report is a very reliable leading indicator of upcoming construction projects. If the data comes in positive form in relation to the forecasts, the currency becomes stronger (or Canadian Dollar or US Dollar, depending on the report) if the data are negative, traders can expect a decrease in the value of currency. Traders are also looking for significant changes in the monthly number of building permits due to the fact that is closely correlated with interest rates. A large reduction in the number of permits may indicate a peak in interest rates, while a significant increase in interest rates indicates an agreed minimum.
Competent investment analysis is not easy even for the professional and novice investors often do ignore the fundamental assessment of companies when trading in the stock market…