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US Federal Reserve's FOMC report is one such event I've identified that more often than not has a significant impact on currency pairs adjacent to the USD. And the ECB's interest rate report is another such event which has a similar effect for currency pairs with EUR being one of them.

For someone who's still relatively new to the forex market, what other events should I mark out on my diary as change-inducing ones?

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Anything related to the central bank will have a large impact, as they are the ones who determine interest rates, and interest rates have a big effect on currency flows.

GDP is also important, as when there is an economic slowdown it may result in the central bank reducing rates to boost economic activity. The opposite is also true, large increases in GDP may mean that an interest rate hike might be needed.

Inflation data is also very important. Again, large changes in inflation either way may push the central bank towards changing rates. This data typically is in the form of CPI

Note that each central bank is different. They all have specific mandates and specific pieces of economic data that they place emphasis on. The Federal Reserve as of late has closely been watching inflation data, especially wage inflation data, and employment. Significant deviations in these data points from whats expected by investors can greatly move the market. However, these specific factors are a little less important for, say, Mexico, which is mostly concerned with headline inflation. Read the statements issued by the central banks to find out whats important to them.

Central banks also issue expectations for things like growth, CPI, etc. If these expectations are not met, it may result in a policy change, or at least talk of a policy change, at the next meeting of the central bank. Anticipating these policy changes and trading accordingly is one strategy to be a profitable forex trader

Also, there are several forex news calendars online that indicate what is likely to be high impact news. These can be helpful starting out.

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    Usually CPI is a good bit of news to trade and checking the charts recently it seems to be getting good moves again. However during the initial ZIRP environment of the economic crisis of 2008 say until 2011 or 2012, CPI didn't move the market like it normally does. Also careful on some pairs for instance trading EURUSD on data from the USA, its better to focus on USDJPY. – magister Nov 3 '15 at 10:12
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Trading Speeches can be difficult, 1 comment can be bullish then next phrase bearish. However language algorithms can process the tone of the entire message before you can read the first word or have even finished downloading the text of the statement. The biggest news is the 1st Friday of the month, the non-farm payrolls out of the USA. You used to be able to get the news before the price moved, but high-frequency algos changed all that, essentially the exchanges get quote stuffed, so good luck unless you are using a bucketshop. Better to wait for a pull back from the initial reaction if the numbers are good, otherwise you will get a fill at the peak. If the numbers are a big deviation from expectations then you can just jump in. Back in 2006 the Bank of England raised interest rates when it wasn't expected and the GBPUSD flew 500 pips. This Forex calendar has charts of every news release, so you can see what to expected based on what has happened in the past with a certain bit of economic news.
http://www.fasteconomicnews.com/fx_calendar.aspx

  • Interest Rates, PMI (Purchasing Managers Index), GDP, CPI, Retail Sales, Industrial Production, Employment Rate including change like NFP and Wednesday's ADP. Also you can trade earnings announcements on stocks, and the weekly West Texas Crude Inventories at 10am EST Wednesdays and the Natural Gas storage figures on Thrusdays. – magister Nov 3 '15 at 10:16
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It's impossible to determine which event will cause a major shift for a certain currency pair. However, this does not mean that it's not possible to identify events that are important to the overall market sentiment and direction. There are numerous sites that provide a calendar for upcoming and past events and their impact which is most of the time indicated as low, medium and high. Such sites are:

Edit:

I would like to add to that, that while these are major market movers, you cannot forget that they mainly provide a certain direction for the market but that it's not always clear in which direction the market will go.

A recent and prime example of a major event that triggered opposite effects of what you would expect, is the ECB meeting that took place the 3rd of December. Due to the fact that the market already priced in further easing by the ECB the euro strengthened instead of weakening compared to the dollar. This strengthening happened even though the ECB did in fact adjust the deposit by 10 base points to -0.30 % and increased the duration of the QE.

Taking above example into consideration it's important to always remember that fundamentals are hard to grasp and that it will take a while to make it a second nature and become truly successful in this line of trading.

Lastly, fundamentals are only a part of the complete picture. Don't lose sight of support and resistance levels as well as price action to determine when and how to enter a trade.

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Look for unsustainable policies and actions by policy makers, both before and possibly during, when looking at the ForEx markets. Consider some examples:

  • The US closes the gold window in 1971. This could have gone further into the 1980s; some of the warning signs were European leaders expressing anger at American's consumptive lifestyle and questioning whether they could honor their gold contracts with other countries. This event caused many messes throughout the 70s.
  • Soros betting against the Bank of England (huge win). The key indicators were an unsustainable economic boom, inflation outpacing interest rates, and policies incompatible with the rest of England's trading partners.
  • Swiss Central Bank move to let their currency float. You have two empires, one that manages itself well and one that doesn't. The one that manages itself well tries to tie its currency to the irresponsible one. Equilibrium will eventually take back control.
  • The Mexico currency crisis of the 90s. Mexico's national debt was part of the warning sign, along with too many changes too quickly, setting the stage for an environment that discouraged investors (long term investors feel uneasy about too many changes in a short period of time).

Each of those events could be seen in the growing unsustainability of local policies. ForEx markets and local policies can appear to stay on an unsustainable path for a long time, but equilibrium will force itself on everything in the long run. In two of the above cases, the initial response wasn't enough to offset the mess, and more and more intervention had to be done, only making matters worse. When you know how unsustainable policies are and how big the corrections need to be, you can quickly ascertain whether an action by policy makers will be enough.

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Sometimes the market has to be left alone. Too much interference of the policy makers to stabilize the falling market can actually result in a major crisis. Every change stabilises after sometime and it is also applicable in the Forex trading market. So, the eager investors should learn to have some patience and wait for the market to stabilise itself rather than make random predictions on the policies released by policy makers

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currency's central bank or treasury/finance department speeches that can announce a significant change in policy. That includes:

  • monetary policy,
  • interest rate changes, including lending rates, cash rates
  • conferences.
  • inflation stats

Particularly when it is a high level figure within the department such as the President or Prime Minister making the announcement.

Macroeconomic stats:

  • A Employment Statistic, such as
    • USA non-farm payrolls
    • most unemployment claims
  • manufacturing rates of production for major industries for that country
  • Stats on a major import/export item specifically, or covering
    • Like with New Zealand, Milk is a huge commodity out there. So GTD index can have high impact.
    • Middle Eastern region and anyone who purchases Oil [related products] would be affected by OPEC policy.

GeoPolitical considerations, such as:

  • Presidential elections
  • War declarations on other countries, particularly if it is of interest to a 'major' pair (like USD, EUR)
  • coup d'etats (e.g. Turkey)
  • Scandals at high levels of gov't or major industry (Bernie Madoff, DieselGate)
  • Joining or leaving a treaty which has significant economic value (Brexit)
  • policies affecting access to decentralized currencies (like Bitcoin).
  • Act of God, natural disaster, terrorist attack, or other unplanned event that impacts a large segment of the economy.

Economic calendars, such as ForexFactory and MyFxBook track planned economic news releases. Obviously, a coup d'etat or war declaration may not be well known in advance.

protected by Chris W. Rea Jul 7 at 12:02

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