📰 Reports and News Events Affecting the Foreign Exchange Market
This analysis covers the major sources of news events and reports that tend to influence the international Forex markets. The countries involved are the 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 US monetary policy using three tools:
- Discount rate
- Reserve requirements
- Open market operations
The FED’s Board of Governors is responsible for (a) and (b) (discount rate and reserve requirements), while the FOMC is 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 affect interest rates and foreign exchange rates and indirectly affect US economic activity, employment, inflation, and more. The FOMC meetings occur every six weeks, totaling eight times per year.
Along with FED actions, Forex traders must pay close attention to statements released at the end of each FED meeting. Nothing is said without reason. Simple words from FED officials can reveal intentions regarding future actions, mainly interest rates. The Forex market favors interest rate increases. Remember, Forex investors and carry traders buy and sell currencies based on the interest rate differential between two currencies. An unexpected statement from a FED member can move any Forex major 1,000 pips up or down instantly.
🔗 Visit: » http://www.FederalReserve.gov
(2) Beige Book
The Beige Book is released every six weeks (eight times per year) and summarizes reports from twelve Federal Reserve districts. It compiles information gathered by all Federal Reserve Banks, reflecting current economic conditions by district using reports from bank directors and interviews with economists and experts. The Beige Book organizes this data by district and sector. It may guide the FOMC in adjusting US monetary policy. Two reports with special impact on Forex markets are the New York Empire State Index and the Philadelphia FED report.
🔗 Visit: » http://www.FederalReserve.gov/monetarypolicy/beigebook
(3) Gross Domestic Product (GDP)
GDP measures the economic activity of a country or economic zone and is considered the most reliable indicator of economic health worldwide. An unexpected rise in US GDP typically has a strong positive impact on the US dollar, as higher GDP motivates the FED to raise interest rates. The US GDP is released in three stages:
- Preliminary GDP Report
- Advanced GDP Report
- Revised GDP Report
🔗 Visit: » http://www.BEA.gov/newsreleases/national/gdp/gdpnewsrelease.htm
(4) Consumer Price Index (CPI)
The CPI measures the price level of various goods and services over a specific period. It represents the weighted average prices of a basket of goods and services. Released by the Bureau of Labor Statistics, CPI reports are important because they significantly influence the FED’s interest rate decisions.
🔗 Visit: » http://www.BLS.gov/cpi/
(5) Employment Reports (Non-Farm Payrolls)
The US Non-Farm Payrolls (NFP) report is released monthly (the first Friday of each calendar month) and plays a major role in Forex market volatility. The NFP report shows the number of new jobs created or lost during the period. The more jobs created, the better for the US dollar, for two reasons:
First, higher employment figures make it easier for the FED to raise interest rates.
Second, more workers mean more buyers in the economy and higher expected growth.
Some components of the employment report, such as average hourly earnings, hold special significance for Forex analysts.
🔗 Visit: » http://www.BLS.gov/ces/
(6) Balance of Payments (BoP)
The balance of payments is released monthly and measures the value of imports versus exports plus current account flows. The Current Account Flows report indicates the amount of capital flowing into the economy compared to capital flowing out.
🔗 Visit: » http://www.BEA.gov/international/
(7) US Retail Sales
Retail sales measure the total sales of retail goods in the US over a month. The US Retail Sales reports strongly influence Forex markets, as they form a key component of GDP. Released by the Census Bureau and the Department of Commerce, the report comes out two weeks after each month-end and includes both in-store and online sales. Retail sales are presented in two versions: one including auto sales and another excluding auto sales.
🔗 Visit: » http://www.CENSUS.gov/retail/index.html
(8) US Consumer Confidence
Consumer confidence measures the level of optimism among US consumers based on the overall economy and their personal financial situation. Consumer confidence typically rises during economic growth and falls during recessions. However, since consumers are not always aware of broader economic conditions, consumer confidence is considered a lagging indicator, especially regarding future stock market performance.
🔗 Visit: » https://www.conference-board.org/data/consumerconfidence.cfm
(9) Durable Goods Orders
Durable Goods Orders, released monthly by the Census Bureau, indicate new orders placed with domestic manufacturers. These orders include deliveries of factory hard goods in the near term or future.
🔗 Visit: » https://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf
(10) Industrial Production and Capacity Utilization
Industrial production measures the output of US factories, mines, and utilities. Capacity utilization estimates how much of the factories’ capacity is currently used. Note that capacity utilization above 85% signals an overheated economy, which could lead to increased inflation.
🔗 Visit: » http://www.federalreserve.gov/releases/g17/Current
(11) Factory Orders
Factory Orders show the dollar value of new orders for durable and non-durable goods. Also known as the “Manufacturers' Shipments, Inventories, and Orders Report,” it is released monthly by the Census Bureau and divided into four parts:
- New orders
- Unfilled orders
- Shipments
- Inventories
🔗 Visit: » http://www.census.gov/manufacturing/m3/index.html
(12) Business Inventories
Business Inventories measure the dollar value of inventories held by US retailers, wholesalers, and manufacturers. Higher business inventories typically indicate a weaker US economy.
🔗 Visit: » https://www.census.gov/mtis/index.html
(13) Producer Price Index (PPI)
The Producer Price Index (formerly the Wholesale Price Index until 1978) 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.
🔗 Visit: » http://www.bls.gov/news.release/ppi.toc.htm
(14) US Home Sales
Strong home sales indicate increased consumer spending and confidence in the economy. Housing also generates taxable income for the economy. The US Home Sales report is released by the National Association of Realtors during the fourth week of each month and covers the total number of existing home sales along with average sales prices by region.
🔗 Visit: » http://www.realtor.org/research-and-statistics/housing-statistics
(15) Construction Spending
The Value of Construction Put in Place Survey (VIP), first published in 1964, reports the aggregate dollar value of US construction work. Released monthly by the Census Bureau, the Construction Spending report covers new construction and improvements to existing structures, including both public and private sector spending.
» https://www.census.gov/construction/c30/c30index.html
(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) consists of 19 member countries, including Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain, listed alphabetically. Similar to the United States, the most important indicators for the Eurozone include Interest Rate Decisions, Unemployment Reports, Inflation, Retail Sales, and Industrial Production.
(1) The Role of the European Central Bank (ECB)
The European Central Bank is the most important financial institution in Europe, responsible for implementing the Euro’s monetary policy. In other words, the ECB ensures price stability and protects purchasing power within the Euro area. The ECB’s most significant decision is the monthly Interest Rate Decision. Overall, there are three key monetary decisions made by the ECB:
-
The interest rate on the main refinancing operations (MROs)
-
The rate on the deposit facility
-
The rate on the marginal lending facility
🔗 Visit: » https://www.ecb.europa.eu
(2) Data from Important Eurozone Economies
The Eurozone is composed of economies of varying sizes, so news and events from certain countries have a particular impact on the Euro exchange rate. Economic data from Germany, France, and Italy are considered especially influential for the Euro.
(3) Eurozone Core CPI
The ECB aims to maintain inflation in the Eurozone at around 2.0%. In other words, it defines price stability as “a year-on-year increase in the Harmonized Index of Consumer Prices (HICP) for the Euro Area below 2%.” The German and French CPI figures are especially important, as data from these two countries significantly affect the Eurozone.
(4) German ZEW Survey
The German ZEW Survey tracks general sentiment and confidence within Germany and the EU. It is produced by interviewing 350 financial experts.
🔗 Visit: » http://www.zew.de/en/
(5) Eurozone Bond Auctions
These auctions serve as important indicators of confidence in the broader Euro area. Forex analysts closely monitor Italy’s and Spain’s Treasury Bills auctions.
🔗 Visit: » 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’s monetary policy. The BoE’s target for inflation is 2.5% annual growth for the UK.
🔗 Visit: » http://www.bankofengland.co.uk/
(2) Inflation Reports (CPI, PPI)
Forex analysts focus on the Consumer Price Index (CPI) published by the Office for National Statistics.
🔗 Visit: » 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 covered:
(i) The GFK survey reflects events from the previous twelve (12) months and expectations for the following twelve (12) months.
(ii) The NCCI survey reflects the current situation and expectations for the next six (6) months.
Other reports considered important for the British economy and GBP, as with the US and Eurozone, include GDP, Balance of Payments, Unemployment Reports, Retail Sales, and more.
(D) JAPAN
Time of News Releases
|
Country |
Currency |
Time (EST) |
|
Japan |
JPY |
18:50 - 23:30 |
(1) News Releases from Important Japanese Institutions
The Bank of Japan (BoJ) is Japan’s central bank, responsible for implementing Japanese monetary policy using tools such as the short-term interbank rate and the overnight call rate. Note that the difference between Japanese 10-year JGB yields and US 10-year Treasury notes is considered an important driver of the USDJPY rate.
🔗 Visit: » https://www.boj.or.jp/en/
The Japanese Ministry of Finance (MoF) is also very important, as it frequently intervenes through regular statements.
🔗 Visit: » http://www.mof.go.jp/english/
Finally, the Ministry of Economy, Trade and Industry (METI) plays a key role by overseeing Japanese industries and protecting the competitiveness of Japanese businesses.
🔗 Visit: » 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 indicator and is released one month before the National CPI.
🔗 Visit: » http://www.stat.go.jp/english/
As with the US, Eurozone, and UK, other reports considered important for the Japanese economy and JPY include GDP, Balance of Payments, Unemployment Reports, Retail Sales, and more.
■ Reports and News Events Affecting the Foreign Exchange Market
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