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Forex Trading News Week Wrap-Up EUR/USD

If you’ve been learning about forex trading on the rapid forex blog (or elsewhere), you’ve probably been told numerous times to go to fx360.com, follow the economic calendar AND subscribe to a bunch of good forex blogs to follow the news of what’s going on in the online forex trading world.

This is Good Advice – But Who Has the Time?

There is a lot to keep up with to have the most current forex information online.  Fortunately, I’ve spent at least a dozen hours this week following all of the economic fundamental news for the forex market and I’ll give you the ultra-condensed reader’s digest version (if you want the FULL scoop, you’re welcome to spend a few hours per day following all of the news).

Major Forex Events

The EUR/USD is one of the most popular currency pairs for forex traders in the US to trade (80% of rapidforex.com’s readers are in the US).  There are some major factors affecting both sides of this currency pair right now.

Euro – Greece is in the middle of a huge debt crisis right now. As part of the Eurpean union, Greece’s problems are having a negative impact on the value of the Euro, which was shown as the Euro weakened against the us dollar (USD) and the Japanese Yen (JPY).

Germany has offered to bailout Greece but that only puts a bandaid on the situation. From the perspective of the European Union (EU), it’s like robbing peter to pay paul as assets shift from one side of the EU to another.  Clearly, Greece is a threat to the Euro.

US Dollar – Unemployment rates continue to rise in the US as 27 states reported rising unemployment rates in February.  With the passing of Obama’s healthcare plan earlier this week, the US continue to steep itself deeper in debt.

The US Government is even preparing to sell off assetts to help offset some of the massive debt they’ve been accumulating.  This can be a good thing for the USD, but still shows signs of panic. Meanwhile, the cost of the Iraq war continues to grow by billions each day.

Forex Trading News Assesment

The news listed above is interesting. The news gives many reasons about why the EUR and USD are both set for longer term declines. The interesting part of this is, which one will fall more sharply? This is a question nobody knows the answer to, we can only speculate.

As a forex trader, the news is important because it gives me an idea about how rapidly the forex market will move. I’m still looking at my forex technical indicators, drawing trendlines,  looking at Japanese candle patterns, paying close attention to the valuable forex information called fundamental announcements,  applying basic money management guidelines, and following my trade plan (which is all taught in the free 20 part forex trading eCourse at rapidforex.com).

The market news helps us to see cause and affect relationships with forex chart prices. Following this news is like training your mind to see thing the way the Jedi would. You can read all of the news you want & find it completely interesting, but 99% of analysts won’t give you a real opinion about what will happen.

That’s because they don’t know, nobody does.

But there’s still value in knowing what’s going on

Posted in Fundamental Announcements

Valuable Forex Information | Fundamental Announcements

Fundamental announcements are important pieces of forex information because they affect forex prices significantly (often preceded by a tight sideways consolidation in forex charts as forex traders wait for the fundamental announcement).

To monitor forex fundamental announcements, I use the free forex economic calendar at fx360.

A fundamental announcement is a report released by a country to announce its recent economic performance. This is important forex information for trading. There are about 14 different reports that the major Forex players release to describe the economic situation in their countries.

Fundamental announcements reveal the relative strengths of a country’s performance in a variety of areas and can shift the value of that country’s currency.

Fundamental announcements, therefore, are the main reasons for large price swings and breakouts in the currency market.

Each country has a wide variety of forex information it releases in its fundamental announcements.

Some examples of the most widely released forex information are:

1. GDP (Gross Domestic Product): The total amount (expressed in dollars) of the goods and services produced in the country. GDP includes goods and services produced by private industry as well as goods and services produced by public industry. GDP is usually expressed in real terms (that is, prices are indexed relative to some year in the past such that GDP does not also include inflation).
2. CPI (Consumer Price Index): The CPI reflects the relative price of certain consumer items like food, clothing, housing, transportation, and energy. It is indexed to provide a measure of today’s prices compared to prices at some other time (e.g. 1983 or 2000).
3. PPI (Producer Price Index): The PPI reflects the relative price of certain items used by producers in the production process. The PPI includes such items as raw materials and energy. Like the CPI, the PPI is indexed to provide a measure of today’s prices compared to prices at some other time (e.g. 1983 or 2000).
4. Unemployment rate: The unemployment rate is calculated by dividing the total number of persons seeking employment by the total number of persons who are employed. The unemployment rate reflects the percentage of people who want jobs (and are actively seeking jobs) but are jobless.
5. Personal income: The amount of money that all of the persons of the country made in income. Per capita personal income, another measure, is the total amount of income received divided by the number of persons in the country. Like GDP, personal income is usually expressed in real terms (that is, dollars are indexed relative to some year in the past such that personal income does not also include inflation).
6. Consumer spending: The amount of money that all of the persons of the country spent (the amount of income that was spent on consumer goods such as food, clothing, housing, luxury items, etc.). Like GDP and personal income, consumer spending is usually expressed in real terms (that is, dollars are indexed relative to some year in the past such that consumer spending does not also include inflation).

Other forex information released in a fundamental announcement includes industrial production, capacity utilization, retail sales, money supply, current account balance (the balance in a country’s international trade account), and government deficits.

Not all fundamental announcements, however, move forex prices. If the fundamental announcement does not reveal any new forex information about the country’s economic performance, then the value of that country’s currency will likely not change. In this case prices would not break out of the consolidation, but rather would slowly return to the previous trend.

When a fundamental announcement from a previous trading session moved the market to a new price and the new fundamental announcement is only repeating that price move, then the market will likely not respond to the fundamental announcement with a break out. In either case, prices would likely continue to move in the direction of the trend that existed prior to the consolidation.

Posted in Fundamental Announcements