Economic news releases - time - effect - early reactions

[JTrader]

Hi

while I find that the spot EURUSD price starts to be affected by economic news releases, more or less bang on the time of the scheduled release - eg. 13:30:00 UK time give or take a second or 2 (I use rockettime so that i know my PC's time is spot on), last Thursday for example, at 14:57:15 just prior to the Chicago PMI, there was a gap of around 15 pips, the price action continued to be fast, right upto 15:00:00 and beyond.

This took me by surprise as I was not expecting any reaction until 15:00:00 (give or take a second or 2).
Luckily, I was not in a trade, but this has made me consider exiting all trades maybe 5 full minutes before significant economic news releases from now on. But maybe 5 minutes is not always enough?

If price action picks up speed, but still moves in 1 pip increments, i don't have a problem, but a 15 pip gap at a random moment, minutes before the scheduled news release time is a potentially big problem, especially if this gap occurred prior to the scheduled news release time for non-farm payrolls, or ISM manufacturing index etc, where the gap might be 30+ pips.


Do you find that this type of early reaction is a common occurence with EURUSD?

All comments welcome please.

Thanks.

 

[igor123]

Hi

while I find that the spot EURUSD price starts to be affected by economic news releases, more or less bang on the time of the scheduled release - eg. 13:30:00 UK time give or take a second or 2 (I use rockettime so that i know my PC's time is spot on), last Thursday for example, at 14:57:15 just prior to the Chicago PMI, there was a gap of around 15 pips, the price action continued to be fast, right upto 15:00:00 and beyond.

This took me by surprise as I was not expecting any reaction until 15:00:00 (give or take a second or 2).
Luckily, I was not in a trade, but this has made me consider exiting all trades maybe 5 full minutes before significant economic news releases from now on. But maybe 5 minutes is not always enough?

If price action picks up speed, but still moves in 1 pip increments, i don't have a problem, but a 15 pip gap at a random moment, minutes before the scheduled news release time is a potentially big problem, especially if this gap occurred prior to the scheduled news release time for non-farm payrolls, or ISM manufacturing index etc, where the gap might be 30+ pips.


Do you find that this type of early reaction is a common occurence with EURUSD?

All comments welcome please.

Thanks.

Some news including PMI, get released not exactly on stated time, that is what causes early spikes. In some cases early movements can be caused by a news leak.

 

[JTrader]

igor123 - Some news including PMI, get released not exactly on stated time, that is what causes early spikes. In some cases early movements can be caused by a news leak.

Thanks igor,

I was perhaps anticipating both of these possibilities.

 

[JP1966]

Hi

while I find that the spot EURUSD price starts to be affected by economic news releases, more or less bang on the time of the scheduled release - eg. 13:30:00 UK time give or take a second or 2 (I use rockettime so that i know my PC's time is spot on), last Thursday for example, at 14:57:15 just prior to the Chicago PMI, there was a gap of around 15 pips, the price action continued to be fast, right upto 15:00:00 and beyond.

This took me by surprise as I was not expecting any reaction until 15:00:00 (give or take a second or 2).
Luckily, I was not in a trade, but this has made me consider exiting all trades maybe 5 full minutes before significant economic news releases from now on. But maybe 5 minutes is not always enough?

If price action picks up speed, but still moves in 1 pip increments, i don't have a problem, but a 15 pip gap at a random moment, minutes before the scheduled news release time is a potentially big problem, especially if this gap occurred prior to the scheduled news release time for non-farm payrolls, or ISM manufacturing index etc, where the gap might be 30+ pips.


Do you find that this type of early reaction is a common occurence with EURUSD?

All comments welcome please.

Thanks.

Both the Chicago PMI and Michigan confidence are available to subscribers before for scheduled release time.

 

[wiseass]

Good thread. What do you guys find as a good online source to receive UK announcements the quickest?

edit: and US announcements for that matter

 

[notouch]

There's a very strict news lock in policy for both UK and US official data releases. The news is transmitted at exactly the published time. Only accredited news organisations are let in and they charge for instantaneous data. Bloomberg, Reuters, MNI and Dow Jones all have subscription services. There are also squawk services around.

 

[JP1966]

There's a very strict news lock in policy for both UK and US official data releases. The news is transmitted at exactly the published time. Only accredited news organisations are let in and they charge for instantaneous data. Bloomberg, Reuters, MNI and Dow Jones all have subscription services. There are also squawk services around.

For the Michigan and Chicago PMI if you are a subscriber you get told the data before it is released on the wires although the delay on the Michigan is virtually nothing these days.

For all other figures I agree with you.

 

[JTrader]

Although all I really need to know about news releases is whether it is positive for the US economy (EURUSD value should then go down) or negative for the US economy (EURUSD value should then go up), I do not really need to know the figures instantly, because I need to stand aside until the price action has settled as my strategy will easily get stopped out in a fast (and perhaps gapping) market.

However, I have found that although I like "forex calendar @ forex factory" more so than the briefing.com calendar, and fxstreet.com calendar, it does tend to get jammed quickly with too many users connected. Perhaps I should just use my tradestation newsticker............

 

[JTrader]

notouch - There's a very strict news lock in policy for both UK and US official data releases. The news is transmitted at exactly the published time. Only accredited news organisations are let in and they charge for instantaneous data. Bloomberg, Reuters, MNI and Dow Jones all have subscription services. There are also squawk services around.

Thats reassuring to know. That way no-one can get stung minutes before the scheduled release time. Except for with the Michigan and Chicago PMI perhaps.

However, another consideration is the "actual time" to go by.
I have rockettime installed, and set to refresh my PC time on an hourly basis, so my PC time is supposedly as accurate as it could ever be, using atomic time which i believe means something like it will neither gain nor lose a second in 60 million years of use. However, i find that the price reaction to significant news releases can be 7 - 0 seconds before, or after the exact scheduled release time - although I recognise that this does not necessarily mean that the actual data is being released early or later than atomic time. Therefore it makes me wonder whether or not the organisations releasing the data are also using atomic time?
Perhaps they are using atomic time, but get that timme from different atomic time servers?

Thanks.

 

[JTrader]

Hi

todays at 13:56 GMT, there was a spot EUR/USD -14 pip surge down within 15 or so seconds, followed by a +14 pip recovery.

This was 26 minutes after the US treasury budget news release, and after EUR/USD seemed to have settled from this release.

What caused (or could have caused) this?


Cheers
jtrader.

 

[egro1egro]

I think you get all sorts of spikes before and after news not necessarily due to leaks. There are many reasons for that.

a) emotional bursts influenced by some related news or comments in anticipation of the main news

b) broker/MM manipulations sometime in a "weak" moment. When everybody is waiting and not entering any "at market" orders there is little current pressure on the price, which can be exploited.

c) disbalance of pending orders on both sides and/or random fluctuation which causes some sort of chain reaction.

d) many traders closing positions the very last moment before the news.

e) technical failure/freeze due to increased activity caused by many traders submitting pending orders, closing positions etc.

Whatever the explanation...

 

[Baruch]

You can watch a news spike (UK CPI) here:

http://forexmastermaker.com/vid/ukcpi121206/ukcpi121206.html

And another one from yesterday (US Trade Balance):

http://www.forexmastermaker.com/vid/ustbalance121206/us_trade_balance_1206.html

 

[fxchant]

There's a very strict news lock in policy for both UK and US official data releases. The news is transmitted at exactly the published time. Only accredited news organisations are let in and they charge for instantaneous data. Bloomberg, Reuters, MNI and Dow Jones all have subscription services. There are also squawk services around.

I've heard that there are some cool new squawk services on the way that will deliver the numbers instantly to your desktop.

 

[Baruch]

The news trade after US Retail Sales:

http://forexdiamonds.com/video.php?video=121306_USRetailSalesXAutos

 

[JTrader]

EURUSD reaction to EUR & USA speeches, & trading over Christmas week

Hi

have missed out on a 20pip EURUSD mover at 8am, after a good trade signal. Decided to stay out as ECB President Trichet was speaking at 8am and i do not know enough about how EURUSD reacts (f significantly at all) to these speeches. As it turned out, this did not have an unusual effect - certainly no gaps in the 20 pip up move.
I will be less cautious next time ECB Pres. Trichet speaks.
Whether it be Trichet (EUR), Bernanke (US) or any other speaker on the forex calendar either side of the Atlantic, is anyone aware of times when these speeches cause spot EURUSD to move sharply and gap up or down?

Also, how busy compared to normal should we expect 22/12 & particularly the 27-29/12 to be for spot EURUSD? I'm just wondering if these days will be more hazardous due to thinnner volume, with potentail gaps despite maybe also being quieter days due to less participants??
Does anyone with experience of trading during christmas week have an opinion on this?
Do you think these days will be comparable to a May day or spring bank holiday Monday, or even thinner volume/liquidity??

Thanks a lot
jtrader.

 

[Baruch]

jtrader,

Bernanke always moves the market, if he talks about rates and inflation.

 

[JP1966]

Sadly though no central bank speaker is as good as Duisenberg.

Every time he stoofd up he would say we have confidence in the Euro, it is a strong currency etc etc. Every time he said it everyone sold it so by the time he sat down it was already lower.

It was the easiest money you will ever make. Think the euro dollar low was about 83.

 

[JTrader]

S/R level breaks - breakout trend. More likely after recent economic news releases?

Hi

So far today EURUSD has ranged between 1.3190 - 1.3210. At moments giving the impression that the support at 1.3200 will collapse and a trend will form - as sometimes/often is the case.
However, the price has held firm at 1.3190 and seemed unwilling to go lower.

I'm far from an expert on support and resistance, but do you think eurusd key support levels (such as 50's and 100's) are less likely to break if the price is not being driven by recent economic news releases?

I've got the impression that S/R breaks and whether or not a following trend develops, or the price recovers, is a bit of a lottery with a 50/50 chance that once the S/R level breaks, a trend will develop - whether this is or isn't following a news release. A bit like a game of roulette, not much skill involved, but lots of chance.
An S/R level can break and a 70-pip trend may quickly form, or an S/R level can break, a new S/R level will form, and eurusd just retraces back into its former range. Both of these possibilities can occur following or not following economic news releases.
The third possibility is that new S/R levels are formed once the old S/R levels have been breached, and the range drifts a bit higher/lower, but without enough strength or momentum to be called a trend.

Todays EUR current account news release at 9am had little/no effect on EURUSD. And the 1.3190-1.3210 range has held firm.

Therefore are trends more likely to form once S/R levels are breached, when there has been a recent significant economic news release that can drive price action? If so, how much more likely is this do you think?


Thanks a lot
jtrader.

ps. sorry if i repeated myself in this post.

 

[jacinto]

Sadly though no central bank speaker is as good as Duisenberg.

.

I dont need to see a calendar to know when Trichet speaks. Just need to see a 5 minute chart.

spinning top after spinning top after spinning top

 

[Baruch]

A very good article about how the news media get the eceonomic reports:

http://www.whartonsp.com/articles/article.asp?p=336253&rl=1