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Acronyms:
– ADP: Automatic Data Processing, Inc.
Release Date: Monthly, first Wednesday after month-end

The ADP Non-Farm Employment Change report comes just 2 days before the government-released Non-Farm Employment Change report and can provide a good indication of what the NFP release is going to look like.

The ADP looks at the payroll data of over 23 million workers within the United States to determine potential growth in employment.

How this might affect the currency markets, and impact your trades

Employment is a basic indicator of how well a country’s economy is performing. The more people working in the country, the more productive that country is overall, and therefore the more money is circulating within that economy.

If the final figure is greater than the figure that was forecast, this will likely initiate a bullish move within the markets for currency pairs that have the USD as the base currency, such as the USD/CHF, USD/JPY, USD/CAD; and a bearish move for currency pairs with the USD as the quote currency, such as the EUR/USD or GBP/USD.

Acronyms:
– GDP: Gross Domestic Product
Also known as: GDP First Release; Estimated GDP
Release Date: Quarterly, about 30 days after quarter-end

This report indicates the economic stability of the economy via detailed measurable economic activity. This report can determine the risk factor that traders take on the financial markets.

How this might affect the currency markets, and impact your trades

The financial markets work on either risk on or risk off. GDP reports are a crucial element in determining the future direction of the currency’s trend. The favourable outcome is if the ‘actual’ figure is greater than ‘forecast’ figure, it shows that the economy is not only stable but is growing as well.

Release Date: Monthly, on the first Friday of the new month

This report is the earliest indication of either a rise or fall in the rate of labour inflation.

If the prices of labour are higher, then these costs are typically passed onto the consumer, through the increased cost of products and/or services.

How this might affect the currency markets, and impact your trades

This is not really a market-mover as such, but depending on the overall change, it can move the markets more than might be expected.

Also known as: Residential Building Permits
Release Date: Monthly, 17 days after month-end

Securing a permit is one of the first measures toward creating a new structure, it’s an outstanding indicator of potential construction operation.

How this might affect the currency markets, and impact your trades

The Building Permits reports are important market events for news trading strategies in the financial markets. As a leading indicator of the economy’s progress towards monetary policy goals, it informs both the Fed’s sentiment and the market’s sentiment towards the stocks of construction-related companies. In turn, this can create trend-setting volatility in the hours after the release and generate multiple opportunities with high risk/return ratios within the forex market.

Acronyms:
– CB: The Conference Board
Release Date: Monthly, on the last Tuesday of the month

Each month, the Conference Board conducts 5,000 surveys with questions centred around aspects such as business conditions, employment conditions, and family incomes. This consumer sentiment survey allows the analysts to understand the expectations of consumers based on their economic circumstances.

The level of consumer trust in economic activity is determined by consumer confidence. It’s a leading indicator for the sole reason that it can estimate consumer spending, which is key to overall economic activity. Higher readings suggest that customers are more positive.

How this might affect the currency markets, and impact your trades

This Event not only has a direct effect on currencies and stock markets, but it could also have an impact on certain decisions made by the Federal Reserve of the United States.

For example, if consumer morale is declining, this would indicate that economic growth is slowing. Therefore, if the actual figure that’s released is greater than the figure that was forecast, you can expect it to have a positive impact on the US Dollar.

Also known as: House of Representatives Elections, Senate Elections
Release Date: Every 2 years

Congressional Elections happen at two points during a President’s term. At the very beginning, concurrent with their own election, and mid-way through the President’s term.

Below we will focus specifically on the mid-term elections as the concurrent elections are typically over-shadowed by the Presidential Election itself.

The mid-term elections are often regarded as an opportunity to demonstrate satisfaction or dissatisfaction with the president’s results. In fact, it is not unusual for the minority political party (the party that does not rule the White House) to win congressional seats during the mid-term elections.

The mid-term elections are based on the two houses of Congress: The United States Senate and the House of Representatives. Members of the House are chosen for two-year terms, so the midterm elections determine all 435 seats.

How this might affect the currency markets, and impact your trades

The Congress is the entity where laws are enacted, the executive is overseen, and most significantly, money is both collected and spent. According to the founders, Congress, like the legislative and judicial branches, is an equal branch of government. As a result, electing members of Congress allows American citizens to influence their government.

Depending on the results of the elections, the ideas that the corresponding parties have around fiscal policy will have an impact on the overall strength of the US Dollar, and will therefore create volatility in the markets for traders to take advantage of.

Acronyms:
– CPI: Consumer Price Index
– FOMC: Federal Open Market Committee
Also known as: CPI Ex Food and Energy; Underlying CPI
Release Date: Monthly, 16 days after month-end

Core CPI is similar to the typical CPI except for one important detail.

Core CPI doesn’t include either Food or Energy prices within the report. These two factors would typically account for around 25% of the CPI report. The reason these are not included in the Core CPI report is because they’re naturally volatile goods and services. Removing these two factors gives a more accurate view of how the Consumer Price Index is fluctuating and what the currencies level of inflation would be. The FOMC pays much more attention to the Core CPI report than it does the typical CPI report for this very reason.

How this might affect the currency markets, and impact your trades

Having this better view of inflation gives traders an insight into how interest rates may be altered in order to bring inflation under control as per the Fed’s inflation containment mandate.

Interest rate changes can have a substantial impact on a currency and so keeping informed on the Core CPI each month will ensure you’re in a good position as a trader to take advantage of potential interest rate announcements.

Also known as: Durable Goods Orders Ex Transportation
Release Date: Monthly, about 26 days after month-end

The improvement in the overall value of new orders for long-lasting manufactured products (except transportation items) is determined by Core Durable Goods Orders. Since aircraft orders are highly unpredictable and take several months to fill, the core number provides a more accurate picture of ordering patterns.

How this might affect the currency markets, and impact your trades

The term “Core Durable Goods Orders” applies to new orders for such goods in the United States, which are the total durable goods orders with the exception of transportation equipment.

Traders closely track the new orders figures because they can provide a great insight into current economic conditions, as well as future manufacturing production commitments.

Also known as: Retail Sales Ex Autos
Release Date: Monthly, 16 days after month-end

The core retail sales figure is based on Census Bureau data but excludes consumer spending on cars, gasoline, construction materials, and food services. The reason for this is simply because prices for these items are much more volatile and can quite easily distort the overall figure. This statistic reflects the monthly percentage increase or decrease in Core Retail Sales.

How this might affect the currency markets, and impact your trades

The percentage increase or decrease from month to month indicates whether the economy is either shrinking or expanding, as well as how quickly. Retail sales that are extremely high or extremely weak may place upward or downward pressure on retail prices. If retail sales continue to increase, upward pressure on prices will eventually take hold, especially if the figures continue to rise month after month.

Therefore, if the figure reported is higher than the figure predicted, this can be positive for currency and bring opportunities for traders to take advantage of.

Acronyms:
– CPI: Consumer Price Index
Release Date: Monthly, 16 days after month-end

The Consumer Price Index report measures what changes there have been in the prices of both goods and services that have been purchased by consumers. This report helps to determine the rate of inflation as consumer prices play a significant role in the increase or decrease in inflation. However, there is always going to be some level of volatility within the CPI figure as both food and energy are naturally fluctuating goods/services that may potentially skew the figures.

How this might affect the currency markets, and impact your trades

While CPI may not be as accurate as Core CPI (CPI excluding Food and Energy Prices) in determining the potential rise or fall of inflation, it’s still an important report to be aware of as a financial trader. Be sure to keep informed on both the CPI and Core CPI to give yourself the best chance of predicting where the market might move.

Acronyms:
– EIA: Energy Information Administration
Also known as: Crude Stocks; Crude Levels
Release Date: Weekly, 4 days after week-end

The Crude Oil Inventories figure shows how many barrels of crude oil commercial firms have on hand. The Energy Information Administration receives weekly reports from commercial companies on inventory levels, but the EIA must also make certain calculations to arrive at the final figure.

How this might affect the currency markets, and impact your trades

Crude Oil is a major commodity within the United States. However, this event can have a significant impact on the Canadian Dollar as the Canadian Energy Sector is monumental, and shares a somewhat symbiotic relationship with the prices of Crude Oil.

If the Crude Oil Inventories figure rises, it is a poor indicator for oil producers as they’re holding more stock, which typically leads to a decrease in the price in order to move that stock. If the inventory figures fall, this is a good indicator as it signifies that demand is high, and therefore prices for oil will be able to increase in order to maintain sufficient supply.

Also known as: Home Resales
Release Date: Monthly, 20 days after month-end

The transaction data for the sales of existing homes in the United States tracks and records both sales and prices of existing single-family homes, condos, and co-ops by region: West; Midwest; South; and Northeast.

How this might affect the currency markets, and impact your trades

Existing Home Sales are vital for predicting the health of the housing sector and it therefore has a direct effect on the markets. When the data comes out and it is stronger than expected, this is good for the economy, and would encourage traders to buy into the market.

Acronyms:
– Fed: Federal Reserve
– FOMC: Federal Open Market Committee
Also known as: Fed Statement
Release Date: Undefined

The Fed Announcement is a mechanism used by the FOMC to convey monetary policy to investors. It includes policy decisions as well as comments on economic factors that affect their decisions.

How this might affect the currency markets, and impact your trades

This event is undefined and typically includes sporadic decisions and/or policy changes. FOMC statements are typically scheduled, however those decisions or statements that are unscheduled are typically included within the Fed Announcement. It’s important to keep informed on these Announcements as they can have a substantial impact on the markets, depending on the subject matter that’s covered.

Acronyms:
– Fed: Federal Reserve
Release Date: Undefined

When the Fed Chair speaks, it is important for traders and investors to pay close attention to what is being said as there can occasionally be clues to what the future interest rate policy might be, and deciphering those clues will give traders and investors an edge when those interest rate decisions are announced.

How this might affect the currency markets, and impact your trades

The Fed Chair is the head of the central bank and the central bank controls short-term interest rates; therefore, the Fed Chair has a greater influence over the value of the nation’s currency than anyone else, including the President.

Being aware of the Fed Chair’s public engagements is paramount if you’re wanting to trade the US Dollar. Oftentimes there will be clues and hints which will point to future changes or implementations of economic policies which will in-turn affect the US Dollar’s value. Scrutinising these public engagements is one of the factors that separates the casual traders from the professional.

Acronyms:
– Fed: Federal Reserve
Release Date: Undefined

The Fed Chair testifies to a number of government committees and sectors all throughout the year. Oftentimes the Fed Chair will testify alongside the Treasury Secretary and so depending on the subject matter at hand, it can have a significant impact on the markets.

How this might affect the currency markets, and impact your trades

Typically, these engagements are split into two segments. A prepared statement, followed by a Question and Answer session. As both the questions and answers are un-scripted, there can be some unexpected developments which have the potential to heavily impact the markets.

Keeping on top of these events and paying close attention to the Q&A session could provide some beautiful trading opportunities in the market.

Release Date: Every 4 years

The chair is chosen by the President of the United States from among the members of the Board of Governors and serves a four-year term following confirmation by the United States Senate.

A chair can serve multiple consecutive terms, each of which requires a new nomination and confirmation. The longest-serving chair was William Martin. He served from 1951 to 1970. The second longest-serving chair was Alan Greenspan. The chair may not serve at the pleasure of the President; therefore, the Fed Chair cannot be fired by the President of the United States. The chair can however resign before the term expires.

How this might affect the currency markets, and impact your trades

The Chairman of the Federal Reserve is the single most influential figure when it comes to economic policy and therefore the overall value of the US Dollar. Due to this influence, significant volatility is to be expected when the vote happens as it marks the direction that will be taken going forwards regarding economic policy.

This volatility is a great opportunity to trade the markets, so long as you’re well-informed on the economic ideals of each potential Fed Chair preceding the vote.

Acronyms:
– FOMC: Federal Open Market Committee
Also known as: Interest Rates; Fed Funds Rate
Release Date: Scheduled 8 times per year

The Federal Funds Rate is the interest rate charged by banks to each other for lending Federal Reserve funds overnight. These funds are lent by banks from one another in order to meet and retain strict reserve requirements.

The Federal Reserve also uses it as a mechanism to control the country’s money supply in order to achieve a stable economy, as well as a benchmark for interest rates on savings, loans, credit cards, and other items.

How this might affect the currency markets, and impact your trades

This event is high impact, which means when the data gets released a lot of volatility will likely come into the market.

If inflation becomes too high, the Fed will consider raising the Fed Funds Rate. This decreases the amount of money available for lending by banks, slowing both consumer borrowing and demand. It can also make consumer debt costlier, causing consumers to spend less, which in turn lowers demand and prices for goods and services.

If inflation falls, it indicates, among other things, that consumers are not spending. This is not good for the central bank because it could lead to a recession. In this case, the Fed is more likely to lower interest rates in order to increase economic activity. A lower interest rate means less expensive borrowing for both customers and companies, which can help contribute to economic growth.

Acronyms:
– GDP: Gross Domestic Product
Release Date: Quarterly, 85 days after quarter-end

In simple terms, Gross Domestic Product (GDP) is the total value of an economy. It is the sum of all the goods and services rendered within a particular country. Consumption, Investment, Net Exports, and Government Expenditures, these are the four categories that The United States’ GDP can be broken down into.

How this might affect the currency markets, and impact your trades

Economic data reports are critical for a forex trader. These significant economic indicators trigger uncertainty and a lot of speculation. GDP is especially important as it shows the total effect that policies, companies, and consumers have had on the bottom line of a country’s wealth and progress.

Forex traders track this vital piece of economic data, to help pinpoint new trading opportunities, or simply to understand how strong an economy might be at any given point in time. The stronger the currency, the more bullish the overall trend is expected to be.

Acronyms:
– PMI: Purchasing Managers’ Index
Release Date: Monthly, 3 weeks into the month

Due to the way in which the Flash Manufacturing PMI is conducted, it is inherently a strong predictor of the final PMI figure. The Flash Manufacturing PMI reading is an estimation of a country’s Manufacturing Purchasing Managers’ Index (PMI) based on approximately 85 percent to 90 percent of total PMI survey responses per month. The goal is to provide an accurate foreshadowing of the final PMI data.

How this might affect the currency markets, and impact your trades

In general, higher-than-expected releases and previous data indicate that producers are more positive and optimistic about future business. As a result, demand for the US Dollar increases. Readings that begin to fall below forecast and previous data, on the other hand, may indicate that there is less trust and growth in the economy. As a result, demand for the US Dollar falls.

Acronyms:
– FOMC: Federal Open Market Committee
Release Date: Scheduled 4 times per year

The FOMC’s stated aim is to pursue monetary policy that “effectively promotes the goals of full jobs, stable prices, and moderate long-term interest rates.” Their meetings are held to make monetary policy decisions, review economic and financial conditions, and determine market stability and job performance. It is the Fed’s governing body that decides national monetary policy. The FOMC’s effect can be seen in the case of adjusting the Fed Funds Rate, which affects interest rates. If the Federal Funds Rate is boosted, the cost of home mortgages, loans, and credit cards will rise. When the Federal Funds Rate is reduced, the reverse occurs.

How this might affect the currency markets, and impact your trades

The FOMC, or Federal Open Market Committee, is the Fed’s monetary policymaking body. It is in charge of designing a strategy to support market stability and economic development. Simply put, the FOMC is in charge of the nation’s money supply. All Federal Reserve Bank Presidents attend FOMC policy meetings.

Acronyms:
– FOMC: Federal Open Market Committee
Release Date: Scheduled 8 times per year, 3 weeks after the Federal Funds Rate is announced

The committee is part of the Federal Reserve System of the United States, which is the legislative body in charge of monetary policy in the United States. In general, this is accomplished by establishing objectives in the free market and managing securities for the US Treasury. The Federal Reserve Bank of New York performs the bulk of free market operations.

How this might affect the currency markets, and impact your trades

The FOMC is of particular interest to currency traders because it collaborates closely with the Treasury on currency matters. The Treasury normally sets policies for the dollar’s value, but the FOMC guides monetary practices.

Acronyms:
– FOMC: Federal Open Market Committee
Release Date: Undefined

The FOMC (Federal Open Market Committee) is the division of the US Federal Reserve that decides monetary policy. FOMC announcements are one of the most awaited events on the economic calendar because they remind everyone about the US Federal Reserve’s interest rate decision. The FOMC can decide to raise, lower, or maintain interest rates at current levels, which will have a significant impact on currency values. The Board of Governors of the FOMC is made up of seven members and five reserve bank presidents.

Any time a member of the FOMC speaks, it can be a precursor to a policy change, or have subtle clues about the future of monetary policy. It’s important to keep up to date with every time a member of the FOMC speaks publicly as this could have an impact on the markets.

How this might affect the currency markets, and impact your trades

Central banks may surprise the market with a rate hike or cut. When this occurs, a trader should be able to predict which way the market will shift. If interest rates rise, the currency would appreciate, causing traders to buy. If interest rates are cut, traders would most likely sell and buy currencies with higher interest rates.

Keeping on top of public speeches by members of the FOMC may help to give you an edge as to what might be expected if such a decision is made.

Acronyms:
– FOMC: Federal Open Market Committee
– Fed: Federal Reserve
Also known as: Chair’s Press Briefing
Release Date: Scheduled 8 times per year

The FOMC Press Conference is typically an hour long, and consists of two parts. The first part is the reading of a prepared statement by the Fed Chair, and the second part is a question and answer session with the press.

As the questions and answers are unscripted, they can often create volatility in the market, depending on the subject matter that is being discussed.

How this might affect the currency markets, and impact your trades

The FOMC Press Conference is one of the main ways that the Federal Reserve communicates monetary policy to investors. It covers a whole heap of important information, such as the reasons behind the latest monetary policy decisions, as well as what the future looks like with regards to growth and inflation.

All of these aspects are major players when it comes to assessing the USD from a fundamental perspective, and careful attention should be paid to events such as the FOMC Press Conference.

Acronyms:
– FOMC: Federal Open Market Committee
Also known as: Interest Rate Statement; Fed Statement; Monetary Policy Statement
Release Date: Scheduled 8 times per year

The FOMC Statement is the most prevalent way that the FOMC uses to communicate monetary policy to investors and the population as a whole. Typically, the statement is changed slightly with each release.

How this might affect the currency markets, and impact your trades

The FOMC Statement includes the results of the FOMC vote on interest rates as well as a number of other monetary policy measures. It also explains in detail the reasons behind those decisions and the economic factors that pushed each member to their conclusion.

What you really want to look out for however is the economic outlook and what the outcome of future FOMC votes may be, so that you can get an edge on the next Statement release.

Acronyms:
– ISM: Institute for Supply Management
– PMI: Purchasing Managers’ Index
Also known as: Manufacturing ISM Report on Business
Release Date: Monthly, on the first business day of the new month

The ISM Manufacturing PMI surveys around 300 Purchasing Managers in the Manufacturing sector to determine the level of a diffusion index. It’s a good indicator of economic health as businesses will typically react very quickly to changing market conditions. Purchasing Managers are the first on the scene, so to speak. Put simply, if a company is buying, they believe the economy is doing well, and the buying is carried out by the Purchasing Managers.

How this might affect the currency markets, and impact your trades

Typically, the 50.0 mark is your baseline, or break-even point when investigating if industry is expanding (>50.0) or contracting (<50.0). However, you will want to look closely at the Forecast as this will often determine which way the currency will move. Combining these two factors (the 50.0 baseline and the Forecast figure) will give you the best chance to trade this event once the actual figure has been released.

This event is sibling to the ISM Services PMI for which you would follow a similar approach

Acronyms:
– ISM: The Institute for Supply Management
– PMI: Purchasing Managers’ Index
Also known as: Non-Manufacturing PMI; Non-Manufacturing ISM Report on Business
Release Date: Monthly, on the third business day of the new month

The ISM Services PMI surveys around 300 Purchasing Managers in the Services sector to determine the level of a diffusion index. It’s a good indicator of economic health as businesses will typically react very quickly to changing market conditions. Purchasing Managers are the first on the scene, so to speak. Put simply, if a company is buying, they believe the economy is doing well, and the buying is carried out by the Purchasing Managers.

How this might affect the currency markets, and impact your trades

This event is sibling to the ISM Manufacturing PMI for which you would follow a similar approach

Acronyms:
– JOLTS: Job Openings and Labor Turnover Survey
Release Date: Monthly, 40 days after month-end

The Bureau of Labor Statistics conducts the Job Openings and Labor Turnover Survey (or JOLTS) on a monthly basis. This survey examines employment records, work vacancies, the number of employees employed, the number of employees who resigned, layoffs and discharges, and other separations from 16,000 US companies. The report includes both the private and public non-farm industries.

How this might affect the currency markets, and impact your trades

Despite its volatility, the JOLTS study provides us with a good picture of Labour-force demand and economic health. When businesses intend to increase output, the demand for workers rises. If this increase in demand creates a demand-supply imbalance, wage increases may be necessary to recruit new workers. Rising wages may result in increased spending and a higher rate of inflation.

Also known as: New Residential Sales
Release Date: Monthly, 25 days after month-end

The data for New Home Sales is collected by interviews with home-builders and analysis of data from the U.S. Census Bureau’s Survey of Construction. It specifically employs information from Building Permits issued for new construction projects. If a deposit was paid for the purchase of a new home, or if a contract to purchase the home was signed during or after the year of its completion, the home is included in the calculation.

How this might affect the currency markets, and impact your trades

Investors closely track New Home Sales because it is seen as a lagging predictor of real estate market demand and, therefore, a factor influencing mortgage rates. Factors such as household income, unemployment, and interest rates all play a role.

Release Date: Monthly, on the first Friday of the new month
Also known as: Non-Farm Payrolls; NFP; Employment Change

Non-Farm Employment Change is one of the most important USD-related news and has a great impact on the Forex market. Its effect on the Forex market helps to generate clear buy/sell signals, which expert Forex traders can pick up on and trade. There are two things Forex traders want: Volatility, and indications to trade. The Non-Farm Employment Change Report provides both of these almost every single month.

How this might affect the currency markets, and impact your trades

A rise in Non-Farm Employment will typically translate into a rise in the value of the US Dollar. Therefore, currency pairs that have the USD as the base currency, such as the USD/CHF, USD/JPY, USD/CAD, are going to go up; and currency pairs with the USD as the quote currency, such as the EUR/USD or GBP/USD, are going to go down.

A Non-Farm Employment change press release that is substantially higher than previous month will generate long-term trade or buy signals in the Forex market for USD-related pairings.

Also known as: Pending Resales
Release Date: Monthly, 28 days after month-end

The National Association of Realtors’ Pending Home Sales report is a leading indicator of housing market patterns in the United States. It tracks the change in the homes currently contracted to be sold, but are awaiting the closing transaction. This does not include new constructions.

Since the housing market is a sensitive factor in the US economy, it causes some uncertainty in the USD.

How this might affect the currency markets, and impact your trades

There are a number of economic health factors that stem from a home being sold, such as mortgages, renovations, real-estate fees, and so on.

It’s a strong leading indicator as it gives traders an idea of what is to be expected for the economy once these homes are considered ‘sold’ and gives a good idea of the economic pipeline within the housing industry.

Also known as: Philadelphia Fed Business Outlook Survey
Release Date: Monthly, on the third Thursday of the month

The survey is a gauge of regional manufacturing expansion. When the index is above zero, it indicates factory-sector expansion; when it is below zero, it indicates factory-sector contraction. The survey’s aim is to provide a snapshot of current manufacturing activity in this region as well as a short-term forecast of manufacturing conditions in the area, which may provide an indicator of conditions across the United States.

How this might affect the currency markets, and impact your trades

Despite the fact that the Survey only polls manufacturers in a small portion of the United States, it can be a useful predictor of economic and business activity around the nation. Since manufacturing is so important to overall economic growth, the health of the sector is an indicator of the health of the overall economy, and the Philadelphia Fed Survey could provide early warning signs of problems in the regional sector, and therefore the overall U.S. economy.

Acronyms:
– PPI: Producer Price Index
Also known as: Finished Goods PPI; Wholesale Prices; PPI for Final Demand
Release Date: Monthly, 13 days after month-end

Manufacturers’ inflation rate is calculated by the Producer Price Index (PPI). The reading reflects the monthly shift in the average price of a predetermined basket of products purchased by producers. Higher interest rates usually contribute to higher inflation, which helps to boost the country’s currency.

How this might affect the currency markets, and impact your trades

PPI depicts the inflation picture from a different angle than CPI. While changes in consumer prices are significant to customers, monitoring PPI helps one to determine the cause of CPI changes. If, for example, CPI rises much faster than PPI, this could mean that factors other than inflation are forcing retailers to raise their prices. However, if both the CPI and the PPI rise at the same time, retailers can simply be attempting to preserve their operating margins.

Acronyms:
– GDP: Gross Domestic Product
Also known as: GDP Second Release
Release Date: Quarterly, 60 days after quarter-end

How this might affect the currency markets, and impact your trades

The gross domestic product report, like every other piece of significant economic data, carries a lot of weight for currency traders. It shows development in a productive economy while signalling contraction in a declining one. As a result, currency traders will appear to pursue higher GDP or growth rates in the hope that interest rates will follow suit. When an economy expands at a reasonable pace, the benefits flow down to the customer, raising the probability of investment and expansion. In exchange, higher spending leads to higher costs, which central banks aim to regulate by raising interest rates.

Acronyms:
– UoM: University of Michigan
Release Date: Monthly, around the middle of the month

Every month, the University of Michigan surveys approximately 600 households on their views and attitudes toward their own personal economic circumstances, the overall economy, and the idea of making major household purchases at this time.

How this might affect the currency markets, and impact your trades

Consumer spending has an effect on supply and demand. More investment can boost the economy, while less spending can stifle it. Spending can have an effect on corporate income, corporate investments, jobs, and other factors, all of which can have an impact on the larger market and economy. It is a feedback loop, and whether it is positive or negative is determined by emotion.

The consumer sentiment index, as a leading indicator, may provide some insight into how people will spend in the near future based on their optimism or pessimism about the economy.

Release Date: Undefined

There are a number of scheduled events that the President of the United States will typically speak at, such as the State of the Union address. However, there can be a number of sporadic press conferences and the like all throughout the year. Depending on the subject matter in question, these can have a drastic effect on the markets as they can affect things like consumer sentiment or investor confidence.

How this might affect the currency markets, and impact your trades

While not involved in setting interest rates or a lot of other monetary policy, Presidents, Prime Ministers, and other world leaders can have a great effect on their respective country’s currency value. Their rhetoric or worldview may change sentiment when comparing one currency to another. For example, President Trump would speak frequently about relations with China, and in doing so, create volatility in the USD/CNY currency pair.

Release Date: Every 4 years

Political parties mostly support elected leaders in the United States. These groups – associations of politicians, candidates for elected office, and their supporters – pick and help the representatives they want to represent them in elections. In the United States, there are two main political parties that hold the majority of elected positions: The Republicans and the Democrats. Other parties can play a role in an election, but for the past 150 years, all U.S. presidents have come from one of the two major parties.

How this might affect the currency markets, and impact your trades

With expected movements across currency pairs, indices, and commodities, the run-up to the election could present trading opportunities. Such uncertainty is also expected to last until at least January of the following year. EUR/USD, USD/JPY, GBP/USD, and other common USD crosses are likely to be influenced by the winner’s upcoming foreign policies.

Also known as: Advance Retail Sales
Release Date: Monthly, 16 days after month-end

Retail sales are a clear predictor of an economy’s health and whether it is shrinking or expanding. Nearly half of personal consumption is made up exclusively by retail sales. Consequently, retail sales account for nearly one-third of GDP in terms of direct economic activity.

How this might affect the currency markets, and impact your trades

The percentage rises and falls often reflect how rapidly the economy is shrinking or expanding. Retail sales that are extremely high or extremely weak may also place upward or downward pressure on prices. As retail sales increase, upward pressure on prices can grow, particularly if sales figures continue to rise month after month. The same is true when sales are extremely low, placing downward pressure on prices as customers spend less, and again when sales are extremely low over an extended period of time.

Also known as: International Trade in Goods and Services
Release Date: Monthly, 35 days after month-end

The Trade Balance is the net amount of a country’s goods exports and imports, excluding all capital transactions, deposits, and other financial components. If the value of exports exceeds the value of imports, a country’s trade balance is positive (meaning it has a surplus). If the value of imports exceeds the value of exports, a country’s trade balance is negative, or it reports a deficit. The official term for net exports in the current account is the Trade Balance.

How this might affect the currency markets, and impact your trades

The country’s currency is directly influenced by Trade Balance. If a country’s exports outweigh its imports, we may assume that its goods are in high demand on the global market. This would have a direct positive effect on that country’s currency as demand for its currency grows. This occurs because if there is a strong demand for the goods, prices rise and the currency’s value rises. In contrast, if a country’s imports exceed its exports, it means that there is less global demand for the goods manufactured by that country. The result of this is a decrease in demand for the currency, and therefore a weakening in its overall value.

Release Date: Undefined

The United States Treasury Secretary makes regular speeches, however only the ones that might have a direct impact on the financial markets will be listed with the Forex Factory Economic Calendar.

How this might affect the currency markets, and impact your trades

The Treasury Secretary is the mouthpiece of the President’s economic policies and any speeches that he makes that are listed on the Forex Factory Economic Calendar could signal a shift in monetary policy. These speeches are often used to communicate those shifts to both the public as well as foreign governments.

Also known as: Jobless Claims; Initial Claims
Release Date: Weekly, first Thursday after week-end

For a trader, the word unemployment is extremely important because it reveals information about the current state of the nation’s economy. Jobless claims are considered a lagging indicator, which means that the indicator changes only as the economy changes and is expressed in the figures. It triggers a lot of market uncertainty after each release because this knowledge alone affects economic stability, monetary policy, and interest rates in the upcoming decision making by the banks.

If the initial jobless claims are too high, the government attempts to boost the struggling economy by generating employment and introducing tax-free schemes for the unemployed. In the United States, the Federal Reserve would lower the Federal Funds Rate, thus loosening monetary policy. If this fails to stimulate the economy, the federal government will implement monetary policy initiatives, recruit workers for public works programmers, and attempt to stimulate demand through tax breaks.

Lower-than-expected figures usually result in more jobs earning wages and higher consumption spending. This will result in inflationary pressure, which causes interest rates to increase. High levels of unemployment resulted in lower wages, decreased economic activity, and decreased consumption. However, a decrease in initial jobless claims is a hopeful sign and could push the currency upward.

How this might affect the currency markets, and impact your trades

The initial jobless claims are extremely important to forex traders because they are very effective in predicting how monetary policy will respond to Labour market conditions. Monetary policy changes, or a lack thereof, may often cause the value of a currency to rise or fall. Though it may be considered a meaningless number at times, there is no denying that the initial jobless claims can have an effect on currency prices.

Also known as: Jobless Rate
Release Date: Monthly, on the first Friday of the new month

The unemployment rate is the proportion of the work force that is unemployed. It is a lagging indicator, which means that it rises and falls in response to changing economic conditions rather than predicting them. When the economy is in bad shape and work opportunities are scarce, the unemployment rate is likely to increase. It can be expected to fall as the economy is expanding at a healthy pace and jobs are abundant.

How this might affect the currency markets, and impact your trades

The unemployment rate is used by investors and the general public to understand the state of a country’s economy and as an indicator of how well the government is running the country. A high unemployment rate indicates that the economy is unable to provide enough jobs for those looking for work. High unemployment not only exacerbates social problems and prolongs family misery, but it also makes the country less appealing to foreign investors, reducing investment funds coming into the country.

Release Date: Annually

Annual budgets are deemed to be balanced when estimated expenses are equal to projected revenues. It is in debt if its expenses surpass its revenues, and it is in surplus if its revenues exceed its expenses.

The annual budget details the estimated revenue and expenditures of the British Government for the coming year. The method of developing an annual budget entails weighing the sources of revenue such income taxes, NICs (National Insurance Contributions), VAT (Value-added Tax), Corporation Tax, Fuel duty, etc, against public expenditures such as Social Protection, the NHS (National Health Service), Education, Defence, Transport, Housing and of course, the interest on the National Debt.

How this might affect the currency markets, and impact your trades

The Budget influences the economy, interest rates, and financial markets. The fiscal deficit is affected by how the finance minister spends and invests revenue. The size of the deficit and the means of funding it influences the economy’s money supply and interest rates.

In the same way, an increase in indirect taxes will reduce demand. This is because indirect taxes are often partly or entirely passed on to customers in the form of higher prices. Higher prices mean a decrease in demand, which in turn reduces company profit margins, slowing economic production and growth, resulting in a weaker currency.

Also known as: Quantitative Easing Programme; Money Printing Programme
Release Date: Monthly

The Asset Purchasing Facility is the amount of capital that the Bank of England intends to generate and inject into the economy through open market bond purchases in order to manipulate long-term interest rates. Quantitative Easing is another name for this monetary policy method.

How this might affect the currency markets, and impact your trades

As this ‘cash injection’ increases the supply of capital within the economy, it inherently devalues a country’s currency. However, this devaluation can lead to an increase in outside investment which in turn can stimulate domestic growth as money enters the economy from foreign investment and purchasing. Conversely, a devalued currency also means that the exchange rate is a lot costlier for domestic persons and businesses to purchase foreign goods and services, and therefore also increases domestic purchasing as external goods and services become less accessible financially.

Acronyms:
– OBR: Office of Budget Responsibility
Release Date: Annually

The Autumn Statement includes an update on the government’s economic policies based on the most recent Office for Budget Responsibility projections (OBR). The predictions, known as the Economic and Fiscal Outlook (EFO), are released twice a year, at the Budget and the Autumn Statement. They assess the UK economy’s potential results. The OBR offers an up-to-date statement on the current state of the public finances and whether the government can achieve its own fiscal targets. The government’s primary goal is to balance the budget at the end of a rolling five-year term. A balanced budget ensures that the money spent by the government on items like the NHS and welfare in a year is equal to the amount brought in by things like taxes.

How this might affect the currency markets, and impact your trades

The Autumn Statement is a kind of progress-report for government income and spending. It provides a more up-to-date economic outlook and a preview of the government’s budget for the year ahead. It outlines income levels, borrowing levels, expected spending, and financial objectives. The Autumn Statement also includes the latest independent economic forecasts which have been prepared by the Office of Budget Responsibility. Therefore, it holds a great deal of information as to how the country is fairing financially, and if it is on track to reach its fiscal targets. It is imperative that, as a trader, you are following the Autumn Forecast Statement if you are trading GBP-related pairs.

Also known as: Average Earnings Including Bonuses
Release Date: Monthly, 45 days after month-end

The average earnings index data shows the rates paid for Labour by British companies and the UK government. Employee incentives are also included in this article. The UK Office for National Statistics calculates and publishes it. It is in the 3MoY format, which means that it is the average of the last three months as compared to the same time the previous year. The data is presented as the percentage difference in earnings between the two periods. This data is delayed because it is published 45 days after the end of the month.

How this might affect the currency markets, and impact your trades

It is a leading indicator of market inflation CPI (Consumer Price Index) since higher earnings are more likely to cause cons. The higher the likelihood of spending, the more likely the buyer is to spend. CPI inflation is one of the Bank of England’s key mandates, so a positive number is good for the Great British Pound (GBP).

Release Date: Undefined

A bank stress test is a study performed under fictitious conditions to assess if a bank has sufficient resources to withstand a negative economic shock. Unfavourable circumstances, such as a deep recession or a stock market collapse, are included in these examples.

How this might affect the currency markets, and impact your trades

The results of these tests can be a major market mover as it will determine the overall stability of the Great British Pound (GBP). If the GBP remains strong under these fictitious financial crises, then it will be more likely for investors to trust that their capital will be safe within British financial institutions, and thereby increase the amount of capital within the British economy, strengthening the GBP further.

Traders should keep a close eye on these Bank Stress Tests that are often conducted in the last quarter of each year to determine the overall sentiment of financial stability and security for the GBP.

Acronyms:
– BOE: Bank of England
Release Date: Undefined

The Governor of the Bank of England is the most senior position in the Bank of England. The position is nominally a civil service position, but it is usually filled from within the bank, with the incumbent grooming his or her successor. The Governor of the Bank of England is also the Chairman of the Monetary Policy Committee, which plays a significant role in guiding national economic and monetary policy and is thus one of the most powerful public officials in the United Kingdom from a financial perspective.

How this might affect the currency markets, and impact your trades

The Governor of the BoE is involved in a number of talks all throughout the year, covering vast subject matters. It is important for traders to be aware of when the Governor of the BoE is speaking and what they are speaking on so that they are aware of any hints or clues to future financial and economic policy.

This will ensure that as a trader, you are up to date with what is happening with the GBP from a fundamental perspective and will be less likely to be caught off guard if there is a sudden shift in either monetary policy or sentiment.

Acronyms:
– BOE: Bank of England
Release Date: Quarterly

The Bank of England (BoE) is the central bank of the United Kingdom. It is responsible for a wide variety of functions, similar to those of other central banks around the world. It serves as the government’s bank and the last resort lender. The BoE is in charge of issuing currency and, more generally, of monetary policy.

The Monetary Policy Committee (MPC), which consists of nine members, sets interest rate policy. The MPC is headed by the Governor of the Bank of England, a civil service role usually held by a career bank employee. The committee includes the three deputy governors for monetary policy, financial stability, markets, and policy, as well as the BoE’s chief economist. The Chancellor of the Exchequer appoints the remaining four members.

The Monetary Policy Report contains the BoE’s projections for both Economic Growth as well as Inflation. There may also be other pieces of information contained within the report depending entirely on the situation within the British Economy and any ongoing situations.

The Governor of the BoE also holds a press conference in order to discuss the contents of the report after it is released to the public.

How this might affect the currency markets, and impact your trades

The Monetary Policy Report is an important piece of economic data for traders, as it can assist a trader in assessing the stability and direction that the GBP and the UK economy is heading in. With insights into both inflation and economic growth, it is imperative that you, as a trader, are aware of these particular metrics, in order to make an informed decision when trading GBP-related pairs.

Also known as: Jobless Claims; Unemployment Change
Release Date: Monthly, 16 days after month-end

The Claimant Count Change represents a change in the total number of people receiving unemployment insurance in a given month. The metric is measured using administrative data from the benefits and social support system.

This involves individuals who are claiming unemployment benefits and applying for other forms of financial assistance due to a lack of earning opportunities. These forms include, for example, the so-called Universal Credit, a monthly payment that is now replacing six previously cancelled benefits and charges. The change in the Claimant Count is related to the increase in unemployment, but they are not completely equivalent. To begin with, not all unemployed people apply for welfare and are officially registered. Second, certain individuals who are unable to work (for example, due to sickness or disability) may be eligible for compensation.

How this might affect the currency markets, and impact your trades

The measure represents the state of the Labour market. Claimant development signals a downturn in the Labour market. Employment reports are one of the most significant factors influencing the decisions of the BoE’s Monetary Policy Committee; hence, instability in the Labour market can have a negative impact on the GBP.

Acronyms:
– PMI: Purchasing Managers’ Index
Release Date: Monthly, on the second business day of the new month

Purchasing Managers are typically on the front-line and the first to know when a company is expanding or contracting. Therefore, the Chartered Institute of Purchasing and Supply incorporates the results of surveys given to the Purchasing Managers of construction companies all over Great Britain into a ‘diffusion index’ known as the Construction PMI.

This means that instead of waiting for the final data to be released by these companies, traders and policymakers have early-access to what the final figures may look like.

Due to the nature of this index, the reading provided is centred around the 50 figure, with a reading above 50 suggesting that there is expansion within the construction industry, and a reading below 50 suggesting that there is contraction within the construction industry.

How this might affect the currency markets, and impact your trades

Construction is an important economic factor for the simple reason that it represents physical expansion. Where there is building, there is economic activity, whether it is building new homes, warehouses, or factories, construction is the first sign of how an economy is progressing.

Expansion shows that the economy is healthy, and people are able to take advantage of opportunities to either expand their business or improve their living standards with a new home. Conversely, contraction indicates that there is less demand for new structures, meaning less demand for businesses to expand their operations, or less opportunity for people to improve their living standards.

Keeping your finger on the pulse of the construction industry is what may set you apart from other traders, as it gives you an early indication of how the economy may be fairing behind the scenes.

Acronyms:
– CPI: Consumer Price Index
Release Date: Monthly, 16 days after month-end

The CPI, or inflation rate, is at the top of every central bank’s agenda. Changes in inflation cause the central bank’s monetary policy to change from easing to tightening, from dovish to hawkish language, and so on. This is due to the fact that every central bank in the world has an inflation mandate, whether it is the entire mandate or just a portion of it. A traditional mandate is to hold inflation below or close to 2%. There is a vigorous discussion these days about whether this inflation level is acceptable in the current environment, but we are sticking with it until something changes because it helps economies to develop at a normal rate.

How this might affect the currency markets, and impact your trades

Inflation is a significant factor affecting all currencies, including the GBP. In general, countries with high levels of inflation compared to other countries will see their currency depreciate, resulting in relatively equal prices of goods between countries. Furthermore, higher-than-expected inflation would cause the central bank to raise interest rates in order to control inflation.

Release Date: Quarterly, 85 days after quarter-end

The current account explains how a country’s economy is doing. If a nation has a current account surplus, it means that it is a net lender to the rest of the world. Similarly, if a nation has a current account deficit, it indicates that the country is a net creditor. Being a net borrower with a current account deficit is not necessarily a bad thing. Countries with a current account surplus finance the economic operations of countries with a current account deficit. These countries with current account deficits are almost certainly importing more capital in order to invest in the future and use those resources for internal development. If they begin to sell more, these countries’ current accounts will gradually turn to a surplus. It’s just part of the business cycle. If a nation has a current account deficit, it must be offset by a financial account surplus.

How this might affect the currency markets, and impact your trades

One of the most important components of the country’s balance of payments is the current account, which is directly related to currency demand. A growing current account surplus indicates that foreigners are purchasing more domestic currency in order to conduct transactions in the country. Furthermore, the current account surplus can be translated as the surplus in the country’s exports. This ensures that foreign countries would have to purchase more domestic currency to pay for their imports. This would boost demand for the country’s currency, causing it to strengthen in the long run. As a result, the health of the currency and the current account are related. Professional traders are always interested in the state of the current account and whether it has recently been in surplus or deficit.

Acronyms:
– PMI: Purchasing Managers’ Index
Release Date: Monthly, on the first business day of the new month

Purchasing Managers are typically on the front-line and the first to know when a company is expanding or contracting. Therefore, Purchasing Managers are surveyed by institutions such as ‘Markit’ so that an accurate assessment of industries can be made. These assessments serve as leading indicators to traders and investors as they give a detailed view from the frontlines of how the economy is fairing within a particular sector.

The Manufacturing PMI consists of 600 surveyed Purchasing Managers that are asked to rate the relevant levels of business and business conditions, including things like new orders, production, supplier deliveries, inventories, prices, and employment.

Due to the nature of this index, the reading provided is centred around the 50 figure, with a reading above 50 suggesting that there is expansion within the manufacturing industry, and a reading below 50 suggesting that there is contraction within the manufacturing industry.

How this might affect the currency markets, and impact your trades

The Final Manufacturing PMI does not hold as much market-moving power as the Flash Manufacturing PMI that is released beforehand, as the effects of any change in the Manufacturing sector will already likely be priced into the markets.

With that said, if the Final and Flash figures are vastly different, the unexpected differentiation between these two figures will likely see a fresh movement in the markets regardless of the previous Flash report already being priced in.

Acronyms:
– PMI: Purchasing Managers’ Index
Release Date: Monthly, on the third business day of the new month

The manufacturing and service industries are weighted differently in terms of GDP scale. The PMI Services is a more important economic release than the PMI Manufacturing. As a result, if the PMI Manufacturing disappoints, the currency reacts by falling. The currency will rebound if the PMI Services data does not validate the poor PMI Manufacturing data. A separate PMI for the construction sector is published in the United Kingdom. It demonstrates the industry’s strength and how traders respond to the revaluation.

Due to the nature of this index, the reading provided is centred around the 50 figure, with a reading above 50 suggesting that there is expansion within the services industry, and a reading below 50 suggesting that there is contraction within the services industry.

How this might affect the currency markets, and impact your trades

In general, higher-than-expected releases and previous data indicate that producers are more positive and optimistic about future business. As a result, demand for the GBP rises. Readings that begin to fall below forecast and previous data, on the other hand, may indicate that there is less trust and growth in the economy. As a result, demand for the GBP falls.

Acronyms:
– PMI: Purchasing Managers’ Index
Release Date: Monthly, 3 weeks into the current month

In essence, the Flash Manufacturing PMI’s purpose is to foreshadow where the Final Manufacturing PMI will be. Think of it similarly to an exit-poll in an election, except in this instance, instead of just a handful of respondents, the Flash figure is based on between 85-90% of respondents, making it a strong indicator of the Final Manufacturing PMI figure.

How this might affect the currency markets, and impact your trades

As it has a strong basis to foreshadow the Final Manufacturing PMI figure, the Flash Manufacturing PMI figure has been shown to repeatedly impact the markets far greater than its Final PMI counterpart. This is because market sentiment will be priced into the markets at this particular point in time due to the very unlikely variation between the two figures.

Traders should keep a close eye on the Flash PMI figures in order to ascertain how industries are performing and should then also keep a close eye on the Final PMI figures to ensure there are not any surprise variations between the two.

Acronyms:
– PMI: Purchasing Managers’ Index
Release Date: Monthly, 3 weeks into the current month

In essence, the Flash Services PMI’s purpose is to foreshadow where the Final Services PMI will be. Think of it similarly to an exit-poll in an election, except in this instance, instead of just a handful of respondents, the Flash figure is based on between 85-90% of respondents, making it a strong indicator of the Final Services PMI figure.

How this might affect the currency markets, and impact your trades

As it has a strong basis to foreshadow the Final Services PMI figure, the Flash Services PMI figure has been shown to repeatedly impact the markets far greater than its Final PMI counterpart. This is because market sentiment will be priced into the markets at this particular point in time due to the very unlikely variation between the two figures.

Acronyms:
– GDP: Gross Domestic Product
Release Date: Monthly, 40 days after month-end

The GDP m/m, released by the Office for National Statistics each month, is a measure of the overall change in the total value of all goods and services produced within the UK economy compared to the previous month. Everything that happens within the economy, such as investments, government expenses, exports, consumption, services rendered, impacts this figure.

It is the broadest measure available for economic activity, and it is also the primary tool used to gauge the overall health of the economy within the United Kingdom.

How this might affect the currency markets, and impact your trades

The gross domestic product report, like every other piece of significant economic data, carries a lot of weight for currency traders. It shows development in a productive economy while signalling contraction in a declining one. As a result, currency traders will appear to pursue higher GDP or growth rates in the hope that interest rates will follow suit. When an economy expands at a reasonable pace, the gains flow down to the customer, raising the probability of investment and expansion. In exchange, higher spending leads to higher costs, which central banks aim to regulate by raising interest rates.

Also known as: Factory production
Release Date: Monthly, 40 days after month-end

The Manufacturing Production report outlines the total change in the value of output produced by manufacturers, adjusted for inflation. Around 80% of Industrial Production is made up by Manufacturing, and therefore has a significant impact in the overall influence that Industrial Production will have on the financial markets.

How this might affect the currency markets, and impact your trades

The Manufacturing Production report is a leading indicator of economic health. Production is quick to react to any fluctuations within the business cycle and is therefore inherently correlated to consumer conditions such as employment and/or earnings.

Due to the nature of this report, it’s important that traders stay informed on Manufacturing Production in order to determine the current health of the economy, and how that might change in the future if there are vast swings within the report compared to previous releases.

Acronyms:
– BOE: Bank of England
– MPC: Monetary Policy Committee
Also known as: Treasury Committee Hearings; Select Committee Hearings
Release Date: Quarterly

At the Monetary Policy Report Hearings, the Governor of the BoE (Bank of England) and members of the MPC (Monetary Policy Committee) testify on the economic outlook and inflation in front of the Treasury Committee of the UK Parliament.

How this might affect the currency markets, and impact your trades

These hearings can often last a few hours and can create a fair amount of market volatility during that time. These hearings will often contain comments directly referencing the currency markets, which as a trader, you should definitely be listening out for.

Members of the MPC are the ones who set the key interest rate, and so it is incredibly important to be aware of any public engagements that they are partaking in as there may be subtle hints regarding future changes to interest rates, or monetary policies in general.

Acronyms:
– MPC: Monetary Policy Committee
Release Date: Monthly

The Monetary Policy Summary is one of the primary tools used by the MPC (Monetary Policy Committee) to communicate their monetary policies to investors and the wider public. It contains a number of policy measures, including the outcome of their Interest Rate votes and a commentary on the influences that were behind those votes.

Most importantly of all, it discusses the current outlook from an economical standpoint, and may offer clues on how future votes on interests may differ.

How this might affect the currency markets, and impact your trades

Following the news and reviewing central bank decisions should be top priorities for forex traders. Currency exchange rates begin to fluctuate as banks decide their region’s monetary policy. As currency exchange rates fluctuate, traders will increase profits not only from interest accrual from carry trades, but also from market volatility. Thorough research analysis may assist a trader in avoiding surprise rate changes and properly reacting to them when they occur.

Acronyms:
– APF: Asset Purchase Facility
– BOE: Bank of England
– MPC: Monetary Policy Committee
Release Date: Monthly

The asset purchase vote for each MPC member during the most recent meeting is recorded in the BOE’s MPC meeting minutes. The vote breakdown reveals which members are changing their position on asset purchases and how close the committee is to enacting a reform in potential purchases.

How this might affect the currency markets, and impact your trades

The higher the rate of return, the higher the interest rate on the money invested in the forex market and the higher the benefit. Using these metrics, a trader may build an estimate of a rate shift. Usually the economy performs well, as these metrics grow and the thresholds either need to be improved or unchanged, if the growth is minor. Similarly, major decreases would anticipate a rate reduction to encourage borrowing.

Acronyms:
– BOE: Bank of England
– MPC: Monetary Policy Committee
Release Date: Undefined

Members of the MPC (Monetary Policy Committee) hold a large amount of influence over monetary policies and decisions. They are involved in various speaking engagements such as the Jackson Hole Symposium, and various other panel discussions or conferences.

How this might affect the currency markets, and impact your trades

Acronyms:
– MPC: Monetary Policy Committee
Release Date: Monthly

Central Bank Meetings are sessions of a central bank’s monetary policy committee on a regular basis (MPC). The members assess the efficacy of the current system in light of the current economic situation. As the country’s top monetary regulator, the central bank is responsible for fostering a stable economic climate conducive to long-term development. The MPC’s mission is to develop monetary policy that will direct the central bank in achieving this primary goal.

The MPC Official Bank Rate Votes are the outcome of the MPCs votes on how interest rates should be adjusted.

The figure will be reported in the format ‘X-X-X’.

The first number represents how many members of the MPC votes to increase interest rates.

The second number represents how many voted to decrease interest rates.

The third number represents how many voted to hold interest rates.

How this might affect the currency markets, and impact your trades

When a central bank decides to lift a benchmark interest rate, the primary aim is to minimise domestic monetary supply. As a result, the action is referred to as “tightening” because resources will become scarcer. A tightening policy is usually justified by a number of factors, the most important of which is the rise in inflation. As inflation becomes uncontrollable, currency value, demand, savings, and spending become unstable.

Acronyms:
– BOE: Bank of England
– MPC: Monetary Policy Committee
Also known as: Interest Rates
Release Date: Monthly

The Official Bank Rate is the interest rate at which the Bank of England lends money to financials institutions overnight. The rate is decided by MPC members who vote on where to set the rate, with individual votes published in the MPC Meeting Minutes 2 weeks after the rate is set.

How this might affect the currency markets, and impact your trades

Currency valuation is influenced by a great many factors, but few factors more than short term interest rates. These rates are paramount to the overall valuation of a currency and traders should spend a lot of time analysing various economic indicators to determine where changes to interest rates may happen in the future.

This particular release can be overshadowed by the Monetary Policy Summary which focuses on the future, and as there are also a number of indicators which help to predict where interest rates will be set, rate decisions can already be priced into the markets, meaning impact can often be negligible.

Also known as: General Election; House of Commons Election
Release Date: Every 5 years, snap-elections possible in between

Britain is a constitutional monarchy with one of the world’s oldest representative electoral systems. Voters in the United Kingdom elect their local representatives (known as MPs) to Parliament, and the party with the most MPs has the right to appoint its leader as the country’s prime minister. There are 650 parliamentary seats in the country. The majority of them, 533, serve English areas, with Scotland having 59 seats, Wales having 40, and Northern Ireland having 18. Each parliamentary seat represents roughly 70,000 voters and over 98,000 members of the general public. Historically, parties required slightly more than a third of the popular vote to elect a majority of MPs and form a government. The “first past the post” structure Favours solid, one-party rule and a strong executive branch. When a political party wins a majority of seats in parliament, their candidate for prime minister is introduced to the queen or king and sworn in.

How this might affect the currency markets, and impact your trades

The United Kingdom’s elections typically revolve around the two largest parties. The Conservative Party, and the Labour Party. Both of these parties typically share quite different visions for the country, with one advocating for cuts to both spending and taxes, with the other advocating for investment and an increase to higher rates of taxation.

The public perception of these parties is typically what sways the vote one way or the other, and the public perception is largely influenced by the various forms of media, both publicly and privately owned.

What is interesting with the UK elections is that according to opinion polls, the ideals that the Labour Party will often put forward, such as the nationalisation of the Royal Mail, Railway companies, Water companies, Energy companies, and Bus companies are favoured by the majority of the British Public. Yet this simply does not translate when it comes to the public voting at the ballot box.

The exit-poll in the UK Parliamentary Elections has been relatively accurate for past election cycles, and therefore the largest impact on the markets will often be experienced when this exit poll is released.

Acronyms:
– PPI: Producer Price Index
– CPI: Consumer Price Index
Release Date: Monthly, 15 days after month-end

PPI is a critical piece of economic data because it signals potential anticipated inflation. Traders track PPI in forex trading because of the positive relationship between inflation and interest rates, but essentially, traders are concerned about how changes in interest rates will impact currency pairs.

How this might affect the currency markets, and impact your trades

If the consumer price index rises, interest rates will rise as well. As interest rates rise, saving money becomes more appealing because the reward (interest) is higher than before. Spending money becomes more expensive when investors lose out on the higher interest rate if they prefer to spend rather than save. As a consequence, rising PPI could lead to higher interest rates and a stronger currency.

Acronyms:
– GDP: Gross Domestic Product
Also known as: GDP First Estimate
Release Date: Quarterly, 40 days after quarter-end

The Prelim GDP q/q, released by the Office for National Statistics each quarter, is a measure of the overall change in the total value of all goods and services produced within the UK economy compared to the previous quarter. Everything that happens within the economy, such as investments, government expenses, exports, consumption, services rendered, impacts this figure.

It is the broadest measure available for economic activity, and it is also the primary tool used to gauge the overall health of the economy within the United Kingdom.

How this might affect the currency markets, and impact your trades

The gross domestic product report, like every other piece of significant economic data, carries a lot of weight for currency traders. It shows development in a productive economy while signalling contraction in a declining one. As a result, currency traders will appear to pursue higher GDP or growth rates in the hope that interest rates will follow suit. When an economy expands at a reasonable pace, the gains flow down to the customer, raising the probability of investment and expansion. In exchange, higher spending leads to higher costs, which central banks aim to regulate by raising interest rates.

The Prelim GDP is often referred to as the ‘First Estimate’ and has been shown to impact the markets significantly more than the Final GDP figure, often referred to as the ‘Second Estimate’.

Release Date: Undefined

The Prime Minister is the leader of Her Majesty’s Government and is largely responsible for the government’s strategy and decisions. The Prime Minister, as the leader of the UK government, is also responsible for overseeing the functioning of the Civil Service and government agencies. They are also responsible for selecting members of the Cabinet, the ministers that are responsible for such governmental aspects as Transport, Education, Health, Foreign Affairs, Defence, Housing, and so on.

How this might affect the currency markets, and impact your trades

As the most important political figure in the United Kingdom, whatever the Prime Minister says can have a large impact on the financial markets. While their public engagements can occasionally have little bearing on the financial markets, there are times when the Prime Minister speaks on such matters that can greatly influence policies which will shape the UK’s economic policies.

It is important to take notice of any speaking engagements that include the Prime Minister as any comments they make can have an impact on the value of the GBP.

Release Date: Monthly, 23 days after month-end

Public Sector Net Borrowing refers to a report on the difference in value between the income and spending for local governments, central government, and public corporations within the United Kingdom during the previous month.

If the number is positive, this indicates a deficit within the budget. If the number is negative, this indicates a surplus within the budget. (Please note that this figure also includes any financial interventions)

How this might affect the currency markets, and impact your trades

This can be an important piece of data for traders as it will show how the country is handling its finances at the level of both central government and local government, while also giving a clear indication of how public services and corporations are faring.

While the impact may not always be great, there may be times when there is a vast unexpected differential in the forecasted figure and the actual figure, which may have a significant impact in the markets.

Also known as: Sales Volume; All Retailers sales
Release Date: Monthly, 20 days after month-end

The Retail Sales report represents the change in the total value of sales at the retail level adjusted for inflation. As sales in the retail sector account for the majority of overall economic activity, it is a fantastic indicator of how the United Kingdom economy is performing, and the current levels of consumer spending.

How this might affect the currency markets, and impact your trades

The percentage rises and declines often reflect how rapidly the economy is shrinking or expanding. Retail sales that are extremely high or extremely weak may also place upward or downward pressure on prices. As retail sales increase, upward pressure on prices can grow, particularly if sales figures continue to rise month after month. The same is true when sales are extremely low, placing downward pressure on prices as customers spend less, and again when sales are extremely low over an extended period of time.

Acronyms:
– GDP: Gross Domestic Product
Also known as: Revised GDP
Release Date: Quarterly, 55 days after quarter-end

The Gross Domestic Product (GDP) is one of the most commonly used indicators of an economy’s performance or development. It is known as the total value of goods and services generated within the borders of a country in a given time period—monthly, quarterly, or annually. GDP is a good measure of an economy’s size, and the GDP growth rate is probably the best indicator of economic growth, while GDP per capita has a similar relationship with the trend in living standards over time.

How this might affect the currency markets, and impact your trades

The gross domestic product report, like every other piece of significant economic data, carries a lot of weight for currency traders. It shows development in a productive economy while signalling contraction in a declining one. As a result, currency traders will appear to pursue higher GDP or growth rates in the hope that interest rates will follow suit. When an economy expands at a reasonable pace, the gains flow down to the customer, raising the probability of investment and expansion. In exchange, higher spending leads to higher costs, which central banks aim to regulate by raising interest rates.

The Second Estimate GDP is often referred to as the ‘Final GDP’ and has been shown to impact the markets significantly less than the Prelim GDP figure, often referred to as the ‘First Estimate’. This is due to the GDP figure being priced in during the Prelim GDP figure as variation between these two figures is typically minimal. However, if there is a significant variation between these two figures, the Second Estimate GDP can have a significant impact in its own right as the new figure is priced into the markets.

Also known as: ILO Unemployment Rate; Jobless Rate
Release Date: Monthly, 45 days after month-end

Though it is released monthly, the Unemployment Rate equals the total percentage of the UK workforce that is currency unemployed and actively seeking forms of employment during the past 3 months.

How this might affect the currency markets, and impact your trades

Unemployment is typically seen as a lagging economic indicator; however, it still serves as an important factor for traders as a lack of employment means less income, less income means less spending, and less spending means less economic activity could be expected in the short term.

Second to this is the fact that unemployment is a large factor when it comes to policymaking decisions by both government and the Monetary Policy Committee.

Traders should be aware of the Unemployment figures for the United Kingdom if they are looking to trade GBP pairs as higher unemployment could indicate a weaker currency.