Federal Reserve Beige Book

Federal Reserve Beige book and its impact of Forex market

The Beige book is the paper (compilation) issued by the US Federal Reserve System reporting about activity on all major branches of economy by each from twelve Federal reserve banks. The review describes labor and real estate market, agriculture and manufacturing, services sector, bank system and financial institutions, data on energy and natural resources. Official name of Beige book is the Summary of Commentary on Current Economic Conditions.

Impact on the Forex market. If the results published in the book are not in tune with expectations of analysts, the market can go through sharp changes. In majority of cases volatility enhances. Such influence on market is explained by the fact that report on economic conditions is used by congress of FOMC to set basic rates of currency. If Beige book says about influential pressure, FRS can decide to increase interest rate. If economy demonstrates decline, interest rate can be decreased. Therefore, here an evident political interest is shown. In any case, it is rather problematic to forecast the market relying on the Beige book, even assuming that data for all regions is veracious. Usually, optimistic report says for consolidation of the US dollar whereas pessimistic – for its weakening.

Beige book is published two weeks prior to congress of the Federal Open Market Committee (FOMC) of Federal Reserve System. Frequency of publishing is 8 times a year, usually on Wednesday. Importance: high.

Many finance experts as well as investors, traders, broker companies treat Beige Book as important and influential tool, despite the fact it basically includes unrevised data. It is in fact an economic report on state of affairs in the country. Each Federal reserve bank provides unofficial information about situation in the region of its competence. The book is written by each bank in sequence. Reports by heads of bank and its branches, chief economists, heads of districts and entrepreneurs are heard.

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