Understanding the Economic Calendar
Dealing with foreign money necessarily needs certain study orders. These may contain, but are not restricted to, learning the trend and normal true range, studying the support and struggling levels, learning trading volume etc.
These studies are available in an economic calendar. Among various studies that the dealers use on an everyday basis, one of the most significant and yet often ignored area of study is that of the economic calendar! The reason to study economic calendar is to be aware of which fiscal releases are listed and what do they signify! You should also know if there are some releases, what their impacts on real trade system are!
To support forex traders with the study of economic calendar, you need to be aware of the releases that really drive the forex market- important rate changes, employment/being without a job figure, retail cost index, balance of payments, price increases etc. This will regularly cause the market prices to become extremely unstable and the economic calendar is one which makes you aware of this.
All good quality economic calendars will give not simply the time and nature of the releases, but also the earlier figures (where suitable) and a suggestion of what figures the market may give in real time. The kind of economic calendar mentioned above also has an ability to allow the study of detailed explanations for each of the releases, which can be mainly supportive in trying to assess how powerfully the market may be impacted by the release and an easy star rating to signal the predictable significance of every release. The releases of an economic calendar may have an effect on just one currency pair, while a number of the releases will influence many pairs and it is critical for the trader to recognize the inter-relationship between these releases.
If you are doing a small term trading, the economic calendar releases will, without a doubt, impact your trade but if you are doing position trading then the position traders must remain conscious of what is suitable to impact the market. In short, no matters what your daily trading schedule may be, you should make a positive note that it includes an in-profundity study of a dependable economic calendar.
The most common cause of unsteadiness in the Forex markets is the release of economic calendar by administrations and corporations. It’s very important that, as a trader, you are not at all amazed by these announcements. A confident fire way to keep away from being amazed is to keep an economic calendar. There are two outstanding obtainable economic calendars about Forex and they both occur to be free.
The first economic calendar is created from briefing and it’s a tremendously systematic economic calendar. The awesome feature of this economic calendar is that it permits you to see what statements are going to be provided to a trader in a few weeks from the present date. Moreover, when you tick on the name of one of the statements, a fresh window opens, giving you with a wealth of aspects about that exacting announcement. It regularly tells you the “release details” – the significance of the knowledge as it relates to the Forex market. The pointers come in the structure of the letters A through F. A declaration with the ‘A’ significance tells you that this pointer will have a greatly affect the Forex market. Conversely, a statement with”F” significance will have a negligible effect on the instability of the market.
The second economic calendar that you should be conscious about is dailyfx economic calendar. The finest feature of this economic calendar is the choice to filter out only the pointers that speak about to the currencies you want to know about, the most. You will be grateful for the skill to get rid of information you don’t require.
One additional characteristic worth mentioning in the dailyfx economic calendar is the choice to click on the name of a financial event. When you perform this, you can see a meaning of the indicator as well as a review of its application to the instability of Forex markets. As declared earlier, knowing the features that causes instability is dangerous to the achievement of any trader and therefore, it is better for every trader to use an economic calendar for complete security.
Fundamental Economic Indicators
The Consumer Confidence is a leading index that measures the level of consumer confidence in current economic activity and expectation of the economy’s future direction. A high level of consumer confidence stimulates economic expansion while a low level drives to economic downturn. A high reading is seen as positive, while a low reading is seen as negative. [expand title=”Read More…” trigclass=”arrowright”]Gross Domestic Purchases Price Index:
The GDP Price Index gauges the change in the prices of goods and services. Changes in the GDP price index are followed as an indicator of inflationary pressure that may anticipate interest rates to rise. Generally speaking, a high reading is seen as positive, while a low reading is seen as negative.
Purchasing Manager Index:
The Purchasing Managers Index (PMI) is widely used by industrialized economies to assess business confidence. Generally a result above 50 is seen as positive whereas a result below 50 is seen as negative.
Consumer Price Index:
The Consumer Price Index is a measure of price movements by comparing retail prices of a representative shopping basket of goods and services. The CPI data is compiled from a sample of prices for food, shelter, clothing, fuel, transportation and medical services that people purchase on daily basis. Generally speaking, a high reading is seen as anticipatory of a rate hike and is positive.
Retail Sales is a monthly data that shows all goods sold by retailers based on a sampling of retail stores of different types and sizes. The retail sales index is often taken as an indicator of consumer confidence. It shows the performance of the retail sector in the short term. Generally speaking, the positive economic growth anticipates positive movements
The Fed Governor Ben Shalom Bernanke was born in 1953. He graduated from Harvard University and a Ph.D. in economics in 1979 from the Massachusetts Institute of Technology. In 2006 he became the Chairman of the Federal Reserve System. He gives a press conference as to how the Fed observes the current US economy and the value of USD. His comments may determine a short-term positive or negative trend.
The European Central Bank’s president Jean Claude Trichet was born in 1942 in Lyons, France. He graduated from the Université de Paris in economics and became the president of the European Central Bank in 2003. As part of his job in the Governing Council he gives press conferences in the back of how the ECB observes the current European economy. President’s comments may determine positive or negative the Euro’s trend in the short-term.
The Bank of Japan Governor Masaaki Shirakawa was born in 1949. He graduated from the University of Tokyo and a M.A. in economics in 1977 from University of Chicago. In 2008 he became the governor. He gives a press conference as to how the BoJ observes the current Japanese economy and the value of JPY. His comments may determine a short-term positive or negative trend.
Bank of England Minutes:
The Bank of England Minutes are made public two weeks following the BoE’s Interest rate decision, which give a full account of the policy discussion and differences of view among the cabinet. All the votes of the Committee members are recorded within the minutes. Should the minutes show that the BoE has a hawkish outlook on taking on inflationary measures and hence a higher probability of an interest rate increase then this is seen as bullish for the GBP.
Producer Price Index:
The Producer Price Index measures the average change in prices received by domestic producers for their output at all stages of processing. The PPI data is made up from a large number of sectors of the economy including the mining, agriculture and manufacturing sector. A better than expected result is seen as positive.
RBA Interest Rate Decision:
The Royal Bank of Australia’s (RBA) Interest rate decision is an important figure which will indicate the inflationary outlook of the Australian economy. A rise in the interest rate of the country will indicate that the RBA is hawkish about the inflationary outlook of the economy. A rise in the interest rate is expected to have a bullish impact on the AUD and a reduction of the interest rate will have a bearish affect.
The Unemployment Rate shows, as a percentage, the unemployed persons compared to the total labor force. A decrease in this figure will have a positive impact for an economy as it means that more people are working and helping drive the country’s economy through their spending from money earned. An increase in this figure will have negative implications for consumer spending and is seen as a bearish signal.
The unemployment change measures the change, usually in thousands, in the number of unemployed people between a specified period of time. An increase in this indicator from its previous/expected value will have negative implications as it means that more people are unemployed and hence there will be less consumer spending and this less economic growth. A lower than expected reading is seen as a bearish signal.
Purchasing Manager Index Manufacturing:
The Purchasing Managers Index for Manufacturing is an index used to gauge the business conditions in the Manufacturing sector of the economy. Due to the fact that the Manufacturing sector accounts for a large part of the Gross Domestic Product, the manufacturing PMI is a highly regarded indicator of the overall economic condition. A result above 50 is seen a bullish and a result below 50 is seen as bearish.
The Institute of Supply Management Manufacturing Index is based on a survey of purchasing executives of approximately 300 industrial companies and shows business conditions in the US manufacturing sector. It acts as a strong indicator of the overall economic condition in the US. A result above 50 is seen as bullish for the USD and a result below 50 is regarded as bearish.
The trade balance measures the difference in value between a country’s imports and exports of goods. Export data can be used to give a strong indication of a country’s growth and import data gives indication of domestic demand. The economic indicator gives an early indication of the net export performance. A steady demand and supply of a country from which a positive trade balance results is seen as a bullish signal for that country.