Forex Economic Calender
Forex fundamental
analysis is a study of the economic climate in countries whose
currency the traders trade and how the economic factors affect the price of
those currency.
It provides information on how the big political and
economic events influence the currency markets. Speeches that include economic
numbers given by important politicians and statesmen can have a considerable
affect on the price of a currency and they should be closely watched especially
those speeches that concern the United States and therefore the dollar.
It is important that as a trader the economic calendar is
checked for upcoming economic news. The calendar is the creation of economists
who predict upcoming economic figures before they are announced and once
announced the numbers are compared to the consensus forecast. As you can see
from the calendar extract below each announcement has an importance factor
attached to it.
The more important the data is the more volatile the
market will be immediately after the news release. The highest volatility is in
the first 3 or 4 minutes but can continue for 10 minutes before settling down
to reflect the new market swing reflecting the data. Volatility is dependent on
how positive or negative are the actual data when compared to the forecast data
and how important the economic data is.
The key fundamental economic data that traders should
watch out for and know when they are going to be released are:
Interest rates – Investors
tend to move assets to the higher rates.
Employment –
Reduction in employment often leads to a weak economy.
Trade Balance –
A trade deficit usually means that the local currency is weak.
Gross Domestic Product –
The primary indicator concerning the health of the economy.
When using an Forex economic calendar a trader should be
aware of the importance of the data, the timing of the news release, what
impact will differences between the forecast numbers and the actual numbers
have on the market and when any reversionary data is due as that to can have an
impact on price?
Other areas which are important for a fundamental trader
to watch carefully are speeches and announcements made by key political and
banking people. Any speech by the chairman of a central bank is worth listening
to, especially the chairman of the Federal Reserve Bank. Also speeches by key
economic ministers such as the Secretary of the Treasury in the United States
and the Chancellor of the Exchequer in the UK should be watched for any economic
announcement that might cause currency price movements.