I wanted to better explain how to read the economic calendar and why the Red news is the one that matters. So in the previous month, the release was minus 0.1%. You’ll also learn what the color-coding means, as well as what all those figures represent.

Yellow - not that significant and trading on the news, well, it takes a while to get it right…, I have a question if actual and forecast are the some what should I do buy or sell, Please i want tp Know…Whay happens when actual is equal to forecast, Powered by Discourse, best viewed with JavaScript enabled. For example, the Nationwide HPI – M/M means it is released monthly. This is the nationwide building society it measures the change in selling price in homes for Mortgages backed by Nationwide. (7.55) If you want to find out more details then you simply click the details tab and then you find out that this guy is due to speak about the economic outlook and financial technology at the Fintech conference hosted by the federal reserve bank of Philadelphia.

(2.38) And so it gives traders an educated guess about the state of their economy. This is the economic calendar. and CanadaGDP=Difference in GDP growth ratesIGR=Difference in income growth rates\begin{aligned} &\text{USD/Cad(1 - Year)} = z + a( \text{INT} ) + b( \text{GDP} ) + c( \text{IGR} ) \\ &\textbf{where:} \\ &z = \text{Constant baseline exchange rate} \\ &a, b \text{ and } c = \text{Coefficients representing relative} \\ &\text{weight of each factor} \\ &\text{INT} = \text{Difference in interest rates between} \\ &\text{U.S. and Canada} \\ &\text{GDP} = \text{Difference in GDP growth rates} \\ &\text{IGR} = \text{Difference in income growth rates} \\ \end{aligned}​USD/Cad(1 - Year)=z+a(INT)+b(GDP)+c(IGR)where:z=Constant baseline exchange ratea,b and c=Coefficients representing relativeweight of each factorINT=Difference in interest rates betweenU.S. The fundamental elements are sound for the higher GBP.

And not to mention the final GDP and so on and all repercussions against it.

This description will briefly state what the news is about, how a currency should react based on it, and other relevant data. The previous article showed the importance of the economic calendar, and why traders should be on heightened... © Copyright 2014 - 2020, All rights reserved, Cashback (T&Cs apply) - 30% Welcome Bonus (T&Cs Apply). Using a currency exchange rate forecast can help brokers and businesses make informed decisions to help minimize risks and maximize returns. Most Important Central Banks Meetings It is typically used in combination with other forecasting methods to produce a complete result. You would not want, for example, unemployment to be higher than forecasted.

The calendar maybe doesn’t show the two sections - only the month on month (m/m). The job of a financial analyst is to measure results, compare them to the budget/forecast, and explain what caused any difference. Dollar Variance Formula. Accessed March 21, 2020. Therefore, we take $165,721 divided by$150,000, less one, and express that number as a percentage, which is 10.5%. The economic calendar is something that must be part of any trader’s toolkit, as it shows  the potential outside factors that will influence the market. These are the exact moments of time during the trading day at which the news is released. A different currency that you may consider weaker. and CanadaGDP=Difference in GDP growth ratesIGR=Difference in income growth rates​﻿. According to purchasing power parity, a pencil in Canada should be the same price as a pencil in the United States after taking into account the exchange rate and excluding transaction and shipping costs.

Germany is doing even better with m/m up and also when comparing previous year.

As a rule of thumb, the stronger an economy is, the stronger the currency should be.

The purchasing power parity (PPP) is perhaps the most popular method due to its indoctrination in most economic textbooks. For the introduction to the series and other posts in the series, please click here. The news in Red are the ones that truly move the market. Variance analysis and the variance formula play an important role in corporate financial planning and analysisJobsBrowse job descriptions: requirements and skills for job postings in investment banking, equity research, treasury, FP&A, corporate finance, accounting and other areas of finance. Good for currency means Bullish. Lastly, econometric models can consider a wide range of variables when attempting to understand trends in the currency markets. All forecast-to-actual deviation is due to forecast bias. Here, we'll look at a few of the most popular methods: purchasing power parity, relative economic strength, and econometric models. The formula for dollar variance is even simpler. (8.59) If the actual beats expectation, or if it doesn’t beat expectations. Purchasing power parity looks at the prices of goods in different … • The calendar that I check mentions Actual > Forecast means good for currency (For industrial production m/m news).

Sign up to our newsletter in order to receive our exclusive bonus offers and regular updates via email. However, forecast, including multi-period mean, is constantly and consistently higher than actual. However, to profit from economic news releases, you need to know what is happening and when. We’ve also provided you with access to an economic calendar that is always up to date and that features all the information you need to trade successfully. The question is: does it really matter? NFP stands for Non-Farm Payrolls, which is the jobs data in the United States everyone in the world is watching. As you can see, the absolute value removes the negative value. You should remember that the US Dollar is a quote currency in many pairs (EUR/USD, GBP/USD etc.).

Plus, all the top forex broker sites we recommend offer their own calendars, so make sure to sign up now.