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Chapter 21, Part VII. Market Response on News. Page 2

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 22, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Pipruit: And what is consensus forecast?​


    Commander in Pips: Well, consensus is some kind of agreement between some famous traders, economists, analysts and big investors, financial institutions on expected news or macro data. Consensus on macro data usually represents the average number of those who has taken part in a head count. Usually consensus forecasts on macro data are provided by big information agencies, such as Bloomberg, Reuters and others and all other participants point them in their schedules. Here, for instance, is Yahoo’s schedule and information about an expected Non-farm payrolls release:


    [​IMG]

    See “Market Expects” field – that is consensus forecast or market expectations.

    Pipruit: And what is “briefing forecast”?​


    Commander in Pips: Briefing.com is a Yahoo’s partner, so it publishes their forecasts for major data. Almost any world-known financial institution (as JP Morgan or other similar size) has its own opinion on major news or data, but usually this information is not free and provided only to clients. Still, it could be in consensus forecasts, since big banks and other institutions will probably provide their expectations, to, say, Bloomberg, concerning Non-farm payrolls release.


    So, as we’ve said numbers that were provided to create a head poll on some data will be averaged out by information agency and published at the eve of real number release. You even can create your own consensus forecast if you’ll find in the net data from respected authorities, major banks and solid financial companies.

    This consensus forecast treated as the zero point for future actual number comparison. And there could be three different results:

    - In a row with expectation or at expectation, when actual number has been released right at consensus or only slightly different no matter in which direction;

    - Better than expected, when actual number is more positive in economy terms than forecasted. And this “better” is tangible;

    - Worse than expected
    , when actual number is more negative in economy terms than forecasted. This negative difference should be greater than in “as expected” scenario and also should be tangible.

    As a result we get two questions:

    1. Will actual data meet consensus or not?

    2. If not, how big difference will be?
     
    #1 Sive Morten, Dec 22, 2013
    Lasted edited by : Sep 25, 2016
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