CENTRAL BANK

CENTRAL BANK

Central bank plays a major role in the markets. Interest rates are the most important event to Forex markets and any discussions that take place in the central bank’s announcements can cause huge volatility and drastic movements in the market within seconds. As mentioned from the previous post, the general rule is if the interest rates go up, the currency should strengthen, though it doesn’t always last for a long time because the market does what it does.

SOME IMPORTANT CENTRAL BANKS ANNOUNCEMENTS

1.UNITED STATES – Federal Open Market Committee (FOMC), I have already covered FOMC on the previous post but I will now post the actual dates when the meetings will take place, as mentioned they meet 8 times a year. Below are the dates of the meetings.

FOMC_MEETINGS

2.UK – BANK OF ENGLAND( BoE)

The BoE is made up of nine members and meets once a month to determine interest rates, it is usually on the first Wednesday or Thursday of the month, but the minutes from this particular meetings are released 2 weeks later, those minutes are the market movers, they actually show how many voted for the rate hike and how many voted for the rate cut. Those meetings also give an indication of future moves on specific currencies.

3. JAPAN- BANK OF JAPAN( BoJ)

Bank of Japan meets once a month for two days in the middle of the month to discuss the economy and to decide on interest rates. At the end of the meeting, they release their statement and that statement is used by the market to provide clues on future rates moves.

4.CANADA- BANK OF CANADA

Bank Of Canada(BoC) meets 8 times a year to determine monetary policy and interest rate levels. They have a set inflation band of between 1-3% and they set their interest rates in order to remain within this band. A statement is released at the end of the meeting and for Forex market, the statement is more important than the meeting itself and it is used by the market to provide future moves.

5. AUSTRALIA -RESERVE BANK OF AUSTRALIA (RBA)

The Reserve Bank of Australia has about 10 meetings a year to set interest rates levels, their inflation band target is between 2-3% and they also set their interest rates in order to remain within this band. At the end of the meeting, the statement is released and it is used to provide clues for future rate moves.

I have tried my best to break it down into segments for easy understanding. As much as some traders love their charts, it helps to pay attention to this meetings to avoid nasty surprises like a stunt pulled by the Swiss bank, many traders had no idea there was an announcement due on that date. I hope the economic news broken down in this manner will make it easier for you to research more on them, I am not giving out all the information concerning, but just highlighting some few to give you an idea of what to look for. Thank you for reading and if you find this post useful, please DO share with your social media pages or groups using the share buttons below.

FUNDAMENTAL TRADING

Most Traders would sit and argue that their method of Trading is better than the other. Technical traders saying fundamentals don’t work and fundamental traders claiming technicals don’t work. In my own view and opinion,it all depends on an individual. From my experience most traders are more on technical side than fundamentals. For me it is not the matter of the other vs another but the  truth is, these two do work hand in hand together. Looking at each method closely I came to realize that for me things turned around when I started to acknowledge the fundamentals. Technical trader compare the prices from previous charts/graphs, while a fundamental trader focuses more on economic news/events and interested in knowing what moves the market and so forth. When I started  my journey, I never really payed attention to any economic events, in fact I was not even aware of such events and yet I was trading live account already, I had this idea that all I needed was displayed on charts. It was just hectic for me until I got to know that there is more to trading than meets the charts. Because reading is never an issue with me, I made it my mission to find out about this other method of trading that I could explore. I was exhausted from charts, having sleepless nights studying the charts, changing all sorts of indicators, it was really exhausting, I chose to learn as much as I could about the fundamentals, and I must say things changed completely for me, I could also get some sleep, I really needed some at that time.

Finding out about fundamentals gave me a new perspective on trading, and got me thinking that if all the decisions to BUY or SELL were made without consulting fundamentals, such as statistics etc, there would not be much or even no basis at all to make those decisions, therefore my conclusion was, fundamentals provide foundation for technical trading, and also technical trading derives from fundamental trading, I know  most might  disagree, I have seen that in my own trading when things turned around for the better after acknowledging fundamentals, after all, we are trading currencies, knowing a thing or two won’t hurt if at all you want to stick to your charts.

How Do We Benefit From The Fundamentals?

Situations of countries provide more opportunities to trade currencies effectively. The political and economic events influence the currency markets, the speeches and figures are of great importance to traders like me, who are following on economic news events because the market is so supportive of currencies whose interest rates are on the rise. In order for a trader to trade the news, he/she must be aware of the consensus (what market expects) and also the number from previous release as well as the actual number. Let’s have a look at some important news release to look out for if you are thinking of adding fundamentals to your trading, paying attention to what moves the market.

Important Economic News 

1.EMPLOYMENT

RELEASED: MONTHLY

Employment reports are viewed as the measure of the strength and weakness of the economy.

2.RETAIL SALES

RELEASED: MONTHLY

Retail sales generally represent monthly look at how people are spending money on retail outlets.That is the excellent way of finding out where the economy is headed. If retail sales are strong, it is a good sign that the economy of that country is headed in the right direction. The higher the number the better it is for the economy and the appreciation of the currency.

3. INFLATION DATA

RELEASED: MONTHLY

Inflation data is simply the consumer price index (CPI) and it is when the central banks make their decisions on their interest rates, but the focus is more on CORE CPI.

4.GROSS DOMESTIC PRODUCT (GDP)

RELEASED: MONTHLY

It is the measure of the health of the economy, the higher GDP figure suggests a healthy economy, it gives important information about every sector of the economy, it does move the market.

5.FEDERAL OPEN MARKET COMMITTEE (FOMC)

MEETING: 8 TIMES A YEAR

It consists of seven (7) governors of Federal Reserve Board and five(5) Federal Reserve Bank Presidents. They meet 8 times a year to determine interest rates level. FOMC release a statement few minutes after the interest rates announcement has been made, this is the market mover. When rates go up it also means the USD goes up, providing opportunities for traders to trade and profit from it, I personally find this way of trading more relaxing and allowing me to actually enjoy trading, not like before when I was a slave to my laptop, staring at it and trading every day, stay tuned for more and kindly share this post.

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