News Report Effects

Does anyone trade the news? How long after a news release does it have an effect on the market? I have heard it has an effect 1 hour before the report up to 4 days after the report, but there seems to be so much debate.

It depends on several things - on short time frames it generally depends on traders expectations and reactions to the release. Some surprising news releases, such as yesterdays disappointing australian unemployment figures, have a big impact for a few moments, but it happened against a backdrop of strong AUD growth so within a couple of hours the market returned to where it was before. On a daily chart you don't even notice the disruption. More subtle events can have a big impact lasting for many years though, anything relating to monetary policy tends to be long term. If a couple of conservatives retire from a monetary policy committee and are replaced by liberals, the market barely notices - but it is often a major swing point on long term charts.

A lot of market participants seem to buy the rumor and sell the fact, or vice versa. The best way to test this is to look at daily charts and see how figures such as Interest Rates, GDP q/q & y/y, Trade Balance and Foreign currency reserves affect the market.

The best thing about trading the rumor is that you know when you should exit, but when you should enter is a little more fuzzy. Perhaps at the London open when liquidity kicks in.

Good info guys but to me it seems only sensible that the institutions use the news to bid price up n down regardless of the figures and news its the reaction. If they move the market up 100 points on a news release then I consider that authentic move with a 50-90% retracement to the next bigger level to fit in line with the technical s. So, my main question is does 1 major economic report confirm the other? I view minor reports as counter trend moves.