The answer to your question has to be a long one because there are many factors involved when trading on the basis of news releases. Consequently, I will post one part of the answer now and add the second part after couple of days, and the third and final part just before the weekend.
Remember that the currency market is made up of a complex set of relationships between different currencies. Some may not be so obvious to the casual trader, an example of this would be currencies which correlate unexpectedly with other currencies, where one may end up zeroing out any potential profits, or doubling risks.
I mention this because a good trader should keep this fact in mind whenever an attempt is made to analyze the market. So the implication here is that in order to make a sound analysis regarding the repercussions of news releases, a trader has to be informed about other currency pairs, aside from their currency of interest period
Most traders agree that there are eight currencies, which a savvy trader should keep tabs on. Note that these are just the most significant, and represent the minimum basket of currencies involved in a competent analysis. These currencies are the Japanese yen, the US dollar, the Swiss franc, the Euro, the Australian dollar, the New Zealand dollar, the British pound and the Canadian dollar.
The savvy trader must always be on top of developments in use regarding these currencies. It is important to note that aside from knowing the date of when important news is going to be released, the difference between the actual result and the whisper values or numbers is extremely important in forecasting how the currencies will react to the actual news. Whisper values are merely estimated or expected values which are simply the numbers which everyone expected to appear. bad source
In the next installment of this answer, I will cover the important news and figures to monitor, and when they usually appear.
In the second part of the series about trading news, which by the way is a bit late because it skipped my mind that I would be monitoring the G 20 this week, we will look at the important times where you should be keeping your ears glued to the news reports. All the times mentioned here are Eastern Standard Time.
News releases by country:
1. US – 830 to 1000
2. Japan – 1850 to 2330
3. Canada – 700 to 830
4. United Kingdom – 200 to 430
5. Italy – 345 to 500
6. Germany – 200 to 600
7. France – 245 to 400
8. Switzerland – 145 to 530
9. New Zealand – 1645 to 2100
10. Australia – 1730 to 1930
So those are the times when you should be watching out for news about these countries. Now the next question is, what are the important data you should watch out for. As far as economic releases are concerned, you should be watching out for the following:
1. Interest rate decision
3. Business sentiment surveys
4. Retail sales
5. Industrial production
6. Inflation rates, consumer price or producer price
7. Manufacturing sector surveys
8. Consumer confidence surveys
9. Trade balance
Keep in mind that if you want to be a well-informed broker as far as trading news is concerned, then you must monitor all of these currencies, and all of these economic events. It may seem like an overwhelming thing to do, but many brokers have what is called an economic calendar on their sites. You can have alerts about forthcoming events sent to you, but as far as unexpected news is concerned, you have no choice but to listen or read about then use during those times mentioned above. Besides, it can only make your trading better because it will give you a better feel for the market.
In the next installment, we shall look at the trading implications of news releases. In this last part about trading news releases, let’s look at the implications whenever key economic figures are released.