| Country | Currency | Time (ET) |
| U.S. | USD | 8:30 to 10 a.m. |
| Japan | JPY | 6:50 to 11:30 p.m. |
| Canada | CAD | 7 to 8:30 a.m. |
| U.K. | GBP | 2 to 4:30 a.m. |
| Italy | EUR | 3:45 to 5 a.m. |
| Germany | EUR | 2 to 6 a.m. |
| France | EUR | 2:45 to 4 a.m. |
| Switzerland | CHF | 1:45 to 5:30 a.m. |
| New Zealand | NZD | 4:45 to 9 p.m. |
| Australia | AUD | 5:30 to 7:30 p.m. |
| South Africa | ZAR | 4 to 5:30 a.m. |
What Are the Key Releases?
You have to know the timing of major releases and understand which data is important when you’re trading news releases. Announcements that move the markets the most generally relate to interest rates, inflation, and economic growth. They may include:
1. Interest rate decisions
2. Retail sales
3. Inflation (consumer price or producer price)
4. Unemployment
5. Industrial production
6. Business sentiment surveys
7. Consumer confidence surveys
8. Trade balance
9. Manufacturing sector surveys
The relative importance of these releases is generally dependent on the broader economic environment. Traders have been paying close attention to inflation and interest rate decisions in the post-pandemic years. The markets appeared more focused on GDP growth and employment figures before the COVID-19 pandemic. Traders must understand the current economic backdrop.
How Long Does News Affect the Market?
The market could still be absorbing or reacting to news releases hours, if not days, after the numbers are released, according to a study by Martin D. D. Evans and Richard K. Lyons that was published in the Journal of International Money and Finance in 2005.
The study found that the effect on returns generally occurs on the first or second day, but the impact does seem to linger until the fourth day. The impact on the flow of buy and sell orders is still very pronounced on the third day and is observable on the fourth day.
How to Trade News
One common way to trade news is to look for a period of consolidation ahead of a major data release and to trade the breakout in reaction to the news. This can be done on an intraday basis or over several days. Let’s look at the intra-day chart of the EUR/USD currency pair to get a better idea of such a trade’s mechanics:
Investopedia / TradingView
The EUR/USD pair was in a fairly tight consolidation in July of 2024 ahead of an upcoming release of the June 2024 U.S. retail sales data. The market spent several hours bouncing between clean support in the 1.08950 area and resistance around 1.09020. EUR/USD appeared poised for a breakout to the upside shortly before the data came out.
The numbers came in strong: Retail sales remained unchanged on a month-over-month basis, far ahead of the consensus estimate of a 0.3% contraction. The prior month’s data was also positively revised to a 0.3% expansion, above the 0.1% figure reported previously. Traders began buying the U.S. dollar as a result, sending the EUR/USD pair over 250 pips lower, a move nearly four times larger than the 70-pip trading range before the announcement.
A pip is the smallest measure of change in a currency pair in the forex market. Most major currency pairs are priced to four decimal places, so the smallest change is that of the last decimal point.
The chart below shows the same currency pair 24 hours later:
Investopedia / TradingView
The data release wasn’t enough to reverse the broader momentum of the euro despite the dollar’s initially positive reaction to the strong readout. The U.S. dollar gave back the prior gains over the next day and then lost additional ground to its European counterpart.
News traders should be mindful not only of the potential significance of a particular beat or miss but also of the broader economic environment and market trends.
Trading News With Exotic Options
One way to capture a breakout in volatility without having to face the risk of a reversal is to trade exotic options. These options have barrier levels and will be profitable or unprofitable based on whether the barrier level is breached. The payout is predetermined, and the premium is based on the payout. Popular types of exotic options to use when trading news releases include:
A double one-touch option has two barrier levels. Either one of the levels must be breached before expiration for the option to become profitable and for the buyer to receive the payout. The option expires worthless if neither barrier level is breached before expiration. A double one-touch option is a good option for news releases because it’s non-directional. The payout is made as long as the barrier level is breached, even if the price reverses course later.
A one-touch option only has one barrier level. This generally makes it slightly less expensive than a double one-touch option. The same criterion holds: the payout is made only if the barrier is breached before expiration. This is a good option to buy if you have a view on whether the number will be stronger or weaker than the market’s consensus forecast.
A double no-touch option is the exact opposite of a double one-touch option. There are two barrier levels, but neither barrier level can be breached before expiration in this case, or the option payout is not made. This option is great for news traders who think that the economic release will not cause a pronounced breakout in the currency pair, and they bet that it will continue to range trade.
What Are the Top Traded Major Currencies?
FOREX.com puts the top five most traded currencies as the U.S. dollar, the euro, the Japanese yen, the British pound sterling, and the Chinese renminbe, in that order.
What Are Whisper Numbers?
Whisper numbers are unofficial forecasts by trade professionals and investors. They’re earnings per share expectations that haven’t yet been corroborated by data and may not be.
How Do Options on Currencies Work?
Options on currencies are a viable alternative for those who don’t want to get whipsawed in the markets by undue volatility before they see the spot price move in their desired direction. There are different types of currency options available through a handful of forex brokers.
The Bottom Line
The currency market is prone to short-term movements brought upon by economic data releases both in the U.S. and around the globe. There are several important considerations for traders seeking to take advantage of these moves, such as keeping track of when reports come out, understanding which releases matter, and, most importantly, knowing how to trade based on the data.
Traders should gain a firm foundation on which to benefit from news-driven trading by doing their research, staying on top of important news, and properly managing risks.
Disclosure: This article is not intended to provide investment advice. Investing in securities entails varying degrees of risk and can result in partial or total loss of principal. The trading strategies discussed in this article are complex and should not be undertaken by novice investors. Readers seeking to engage in such trading strategies should seek extensive education on the topic.