Forex Events - 4 Major Types That Will Rock Markets

Upon reading this, most of you – especially when you are new to Forex and even trading – will wonder what am I talking about?

Truth being said, all things have cause and effect in how and why they happen. 

The same applies to Forex markets.

While most people – including yourself I believe – are mainly concerned with making or losing money when market goes up or down, they do NOT analyze the reasons why behind those market movements. 

This is my personal opinion based on my learning and working experiences in financial industry. 

While making money from Forex is important, understanding the market momentums are equally as important. 

As in technical and fundamental analysis. 

But as title implies, I will focus very much on fundamentals here. 

Every month, there are 4 major events that will rock and cause market swing.

Though there are other events as well, these 4 will affect the world and everybody. 

They are: 

1. NFP

2. CPI

3. PPI And 

4. FOMC

With that said, let us examine each of them in schedule sequence. 

1. NFP

Also called Non-Farm Payroll, it measures the number of workers in the U.S. except those in farming, private households, proprietors, non-profit employees, and active military.

Released on the first Friday of each month, the Bureau of Labor Statistics (BLS) surveys private and government entities throughout the U.S. to obtain information about their payrolls. 

The nonfarm payroll numbers are reported monthly to the public through the closely followed Employment Situation summary.

They include 80% of the number of workers in the U.S. and exclude farm workers and workers in several other job classifications.

Active duty military members are excluded from the nonfarm payroll data.

Data on nonfarm payrolls is collected by the Bureau of Labor Statistics (BLS) and included in the monthly Employment Situation report.

The Employment Situation report includes two surveys, the Household Survey, and the Establishment Survey.

2. CPI

Also known as Consumer Price Index, it is the measure of average change overtime in the prices paid by consumers for a market basket of consumer goods and services.

The Bureau of Labor Statistics (BLS) calculates the CPI as a weighted average of prices for a basket of goods and services representative of aggregate U.S. consumer spending.

The CPI is among the most popular measures of inflation and deflation. 

Its report uses a different survey methodology, price samples, and index weights from producer price index (PPI), which measures changes in the prices received by U.S. producers of goods and services.

Prices used to compute the CPI are collected every month.

3. PPI

Also Producer Price Index in short, it measures the average change over time in the prices domestic producers receive for their output. 

It also calculates the level of inflation at wholesale level compiled from thousands of indexes measuring producer prices by industry and product category. 

The index is published monthly by the U.S. Bureau of Labor Statistics (BLS). 

It is different from Consumer Price Index (CPI), which measures the changes in the price of goods and services paid by consumers.

Its indexes are based on products and services, industries, and the buyer's economic identity, which are used to calculate the overall monthly change in final demand.

4. FOMC

Stands for Federal Open Market Committee in short. 

It consists of 12 members. 

7 of which are in the Board Of Federal Reserve Governors. 

The president of New York Federal Reserve Bank and 4 of the remaining 11 Reserve Bank presidents, who serve one-year terms on a rotating basis.

Currently led by chairman Jerome Powell at time of writing this,  it is a branch of the Federal Reserve System which determines the direction of monetary policy by directing open market operations.

It has 8 regularly scheduled meetings each year that are the subject of speculation on Wall Street.

However, the minutes of meeting occur towards the end of every month that will cause market swings in Forex and other investments. 

While most traders do their market analysis and trading setups at start of every week, the problem is they are based on what has happened last week and in last 2 weeks which may not be relevant to what will happen this week. 

Especially every Wednesdays to Fridays. 

With that said, here are the 4 major events which I hope I have enlightened you. 

If you want to know more about other events like in United Kingdom, Tokyo, Switzerland, Oceania and Europe, you may do Google search and check out this site called Forex Factory.