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Tuesday, 7 March 2017

Market Influencers and their Impact Part 1

The market is impacted by multiple influences on a day to day basis. These influences either have a negative or positive impact on the currencies that are traded which will determine what happens to your account balance. This is why it is always advisable to check an economic calendar each day before you start trading. There may be high impact events happening throughout the day or week that will definitely give a different perspective when you start trading. In this weeks blog we will look at the USA and some of its market affecting events. is used as an economic calendar source. You can check it out too. Keep in mind that the items below are only a few of the events that affects the market. There a lot more events either of the same impact level or lower.


First up is the POTUS himself, whoever it is that is in office has the power to cause huge market swings in an instant. This happens when the president makes public speeches or sign some agreement with a foreign nation. The president will speak on anything from nation building steps to policy development and when he does the public listens and responds. If the president's address is seen as good by the market then it responds accordingly and most likely the USD will gain, fast and huge, against all other currencies. Conversely if the president's address forecast gloom the greenback will fall against its counterparts.

As for trading when the president will speak, it is a high risk moment and most decide to close all trades at such points in time as they aren't sure which impact it will have on the market. Generally after the president's impact is felt by the currency, the market normally calms down and gets back into rhythm. It's best practice to not trade this event as it can wipe out your account if it goes against you. If you trade it always ensure you have proper risk management in place.


The Federal Reserve also called the Feds (Not the FBI) control interest rate hikes. The current Chairperson for the Fed is Jannet Yellen(February 2014 - February 2018) and as such makes her have more influence over the USD than any other person including the the president. Whenever she speaks the world listens and responds accordingly.

Her comments normally cause short term spikes with positive or negative effect in the market. She has an important address coming up this month(March) where she will address interest rates. Keep an eye out for this while you trade. All of her speeches are broadcasted for the world to see so when the market responds so will your account balance.


NFP or non-farm payroll is stats on the earnings of the population that is not in the farming sector. This helps to tell the health of the economy and the working class. It measures the change in the number of people employed during the previous month, excluding the farming industry. Job creation is the foremost indicator of consumer spending, which accounts for the majority of economic activity.Better than expected numbers means that people are earning more while the opposite means earnings are down.
This event is an extremely high impact one as seen from previous market impact. When the number come out higher than expected it normally gives the greenback a boost and market sentiments increase with the dollar trending up against its counterparts. When it comes lower than expected the market responds accordingly and trends down. Be careful when trading while this event is occurring. Ensure that risk management is considered or stay away from trading for that time if you are unsure what will happen.

Oil Reserve

WTI (West Texas Intermediate) and Brent Oil as well as world oil prices is normally affected by this event. The USA stockpile's oil in their inventory and a particular amount is expected, normally recorded in millions of barrels. If the US stockpile is higher than expected then oil prices drop globally. This event is just one indicator of world oil prices but it is a huge determinant for WTI and Brent oil that is being traded on the New York Mercantile Exchange (NYMEX).

This indicator also affects the USD whenever it happens as higher than expected oil reserve cause a drop for the USD against its currency counterparts while lower than expected may see a rise in the USD as people try to buy more oil. Oil is traded in USD and as markets buy more oil then more USD is needed in the market place so the demand increase and so does its value.


The Institute of Supply Management (ISM) Non-Manufacturing Purchasing Managers' Index (PMI) (also known as the ISM Services PMI) report on Business, a composite index is calculated as an indicator of the overall economic condition for the non-manufacturing sector. The NMI is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries. 

A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates the non-manufacturing sector is generally contracting. The Non-Manufacturing ISM Report on Business is based on data compiled from monthly replies to questions asked of more than 370 purchasing and supply executives in over 62 different industries representing nine divisions from the Standard Industrial Classification (SIC) categories. Membership of the Business Survey Committee is diversified by SIC category and is based on each industry contribution to Gross Domestic Product (GDP). 

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

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