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Chapter 25, Part I. Dealing with the News. Page 6

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 26, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    So, what news are mostly important:

    1. Unemployment news especially Non Farm payrolls. The point is that they release in the beginning of the month and is in fact leading for such indicators as unemployment rate that is lagging indicator. Also ADP Employment report becomes important as well, especially in recent time. Also keep an eye on weekly Claims data, since significant change could be the indicator of changing in NFP. Average volatility during NFP release is 100 pips and more;

    2. Second – national bank fiscal policy and rate decision. Most eyes are linked to FOMC, but when SNB speaks about CHF or Australian National Bank about AUD rate – that also leads to significant moves with CHF and AUD pairs. Central Bank statements could lead to significant volatility - 50-80 pips;

    3. Retail Sales are also very important, they could lead to the same increase in volatility as Central Banks rate decision – around 50-80 pips;

    4. Trade Balance another important release;

    5. And, finally inflation, such indicators as CPI and PPI.

    Pipruit: Hm, and what about the others and why particularly these indicators are important. I understand about FOMC and NFP, but others? What is really specific with them?​

    Commander in Pips: This is very simple. All of them have a link to GDP that is major growth indicator. In fact all data are linked in triangle – “Growth” – “Inflation” – “Interest rate”. Growth is an initial step, but when it turns to inflationary growth – it leads to inflation significant increase. When Central Bank start to control inflation with interest rate hike – it leads to growth decreasing and so on. That’s why particularly these indicators are mostly important.

    Retail Sales release before GDP and have significant correlation with them, that’s why they are important, the same is Trade Balance. If you remember the major Keynes formula of GDP = Consumption + Investments + Budget expenses + Trade Balance, you should understand why it so. The problem is that although Consumption data is 70% of GDP but releases in the same day as GDP, so it’s a bit lagging, while other, such as Retail Sales and Balance release a bit earlier.
    #1 Sive Morten, Dec 26, 2013
    Lasted edited by : Oct 2, 2016
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