One method used by many traders is known as news trading. In short, since much of what currencies do is based on economic news and indicators, after news and announcements of government statistics (employment figures, housing start, manufacturing capacity, etc.) you can give a real idea of what a currency can make a particular country.
It becomes even simpler if you consider that the US dollar is involved in 90% of all foreign exchange transactions. So you can focus on what’s happening in the United States if you don’t have time to follow all eight major currencies: the US dollar, the pound sterling, the euro, the Swiss franc, the Japanese yen, the dollar Canadian, Australian Dollar and New Zealand Dollar.
If you have a little more time, you can at least control the main news published periodically by governments. The following list shows when some of the major countries in the world publish their news. Also, of course, when considering news, there are events that have unpredictable effects, such as earthquakes, terrorist attacks, and civil unrest, to name a few, that can also affect currencies.
8:30 – 10:00 USD in all hours EST.
Japan JPY 18:50 – 23:30
Canada 7:00 – 8:30 CAD
UK from 2:00 to 4:30 GBP
Italy: 3:45 – 5:00 EUR
Germany from 2:00 to 6:00 EUR
France from 2:45 to 4:00 EUR
Switzerland 1:45 – 5:30 CHF
New Zealand NZD 16:45 – 21:00
Australia 17:30 – 19:30 AUD
And you can go to almost any good trading website and find a cheap calendar that should contain the main launch schedules. For example, the US employment report usually appears on the first Friday of each month with figures from the previous month. Other versions are usually timed in a similar way. Some versions are more important than others, although it changes depending on the situation. Again, for example, the main U.S. interest rate can be a very revealing indicator of what the U.S. Federal Reserve intends to do with the U.S. money supply.
An increase in the rate indicates a tightening of supply and a decline indicates a loosening of supply. However, now, with the US economy in a bad state and the rate at 25%, it is very unlikely that any change in the rate will occur, so this indicator will probably not affect Forex in the near future (this article was written March 31, 2010).
An indicator in the US that is quite important at the moment is the employment figure. The main factor hindering the US economy and impeding growth is the lack of jobs. Therefore, the economy, and most likely the dollar, will probably not strengthen until this situation is alleviated. If a large number of jobs are reported they could make traders more bullish against the dollar, creating a business opportunity.
There are many other factors that can be considered and many of these will be addressed in future articles that will focus on news trading.