Edge Forex

Tag: economic

  • Forex News March 26, 2022

    Forex News March 26, 2022

    #edgeforex #forexsignals #forextrading #forex #market #trading #economic #payrolls #bonds #us #auction #cryptocurrency #bitcoin economic

    US

    The US economic calendar for the coming week includes quarter-end and non-farm payrolls.

    Next week’s US economic calendar begins quietly but ends with a bang. The most important thing to remember is that the month and quarter are coming to an end. We’ve seen some massive moves in bonds, which will result in some associated flows. It’s also the end of the fiscal year in Japan. Here’s what to expect from US economic data in the coming months.

    • Monday’s events include an advance goods trade balance, a 2-year auction, and a 5-year auction.
    • Tuesday’s events include JOLTS, Consumer Confidence, the House Price Index, and a 7-year auction.
    • Wednesday: ADP employment, Q4 GDP final.
    • Thursday: PCE and initial jobless claims.
    • Friday’s economic data includes nonfarm payrolls, the ISM manufacturing index, and construction spending.

    There will also be a lot of Fedspeak. Williams today emphasised the importance of data, and the market is currently pricing in a 79 percent chance of 50 basis points on May 4.

    Germany

    Scholz of Germany said : “We will be independent of Russian gas sooner than many people believe”

    Scholz’s comments: Germany is less reliant on Russian gas than others, with some relying entirely on it. The process of becoming self-sufficient in Russian gas is irreversible.

    It would be something if Russia turned off the taps; it would undoubtedly be a quick transition. 

    Russia

    • The Russian demand to be paid in roubles will be a major topic next week.

    • This week, Putin put a damper on rouble shorts by demanding that payments for Russian oil and gas from ‘unfriendly countries’ be made in rubles.

    • This resulted in a 10% rally in the rouble on Wednesday, with the currency retaining two-thirds of its gains.
    • The question now is whether it occurs (unlikely) and what Russia will do in response (much tougher to guess).
    • Europeans have made it clear that they will not pay in roubles.
    • They argue that the contracts require payment in dollars or euros and that they are under no obligation to change course. Even if they wanted to pay in roubles, they would have a difficult time obtaining them. As a result, Putin’s threat may be hollow.
    • This week we’ll find out. Russia has hinted that if Europe refuses to pay in roubles, it may hold them in arrears. That’s a stretch, but we’re not exactly adhering to global standards.
    • On a domestic level, this would be extremely damaging to Russia, but it would also have a significant impact on European industry and energy consumers.
    • It would be a significant escalation in the economic war. What makes me think it’s more likely than most people believe is that Russian Foreign Minister Sergey Lavrov stated today that the West has declared total war on Russia as a result of sanctions.
    • This could be their way of repaying the favour. The US is talking about increasing LNG supplies, but there won’t be any for years. Anything delivered to Europe will have to be rerouted from somewhere else, most likely Asia.

    China

    • Be on the lookout for data from China this weekend – February Industrial Profit.
    • Due at 0130 GMT on March 27, 2022
    • This expected data release is not listed on all calendars.
    • Due at 0130 GMT on March 27, 2022
    • Saturday, March 26, 2022, at 21.30 US ET (9.30pm).
    • Industrial Profits in China in February 2022
    • prior +4.20 percent year on year • prior +34.3 percent year to date
    • The Chinese PMIs for March will be of greater interest next week. These will begin on Thursday, March 31st, with the official manufacturing and non-manufacturing PMIs from China’s National Bureau of Statistics, which are due at 0100 GMT on March 31st:
    • The times listed in the left-hand column are in GMT.
    • The numbers in the right-most column are the ‘prior’ (previous month) results, and the number in the column next to that is the expected consensus median.
  • Interpreting Economic Data

    Interpreting Economic Data

    #edgeforex #trading #market #stocks #money #forex #trader #forex #economic #data #inflation #dollar #bitcoin economic

    In order to trade better economic data, you must understand what the market is concentrating on. 

    Hundreds of economic data are produced each trading week, but only a small number of them are market movers. 

    This can happen simply because the market is not focused on that particular report, or the release is mostly in line with expectations. 

    You always see beginners questioning the usefulness of fundamental analysis because they see the numbers on US economic data, for example, coming out good but the market doing nothing or even the opposite. The market responds more to surprises or to specific topics on which it is focused.

     If an economic report comes out as predicted, there’s little to truly take away from it until the specifics indicate otherwise. Furthermore, if the market isn’t focused on that economic data, even if it surprises, there’s a good chance the market won’t move much. 

    To trade better economic data, you must understand what the market is concentrating on. If the market is focused on employment because the central bank has stated that it would modify monetary policy based on it, then inflation reports will not move the market as much, and vice versa.

    You should also be aware of where you are in the business cycle. When a country is just emerging from a recession, hardly one cares about inflation and instead focuses on jobs, durable goods orders, ISMs, construction permits, retail sales, and so on. If you are late in an expansion and inflation is high, inflation figures take centre stage because the central bank will move to slow it down, which will also temper economic growth. There is also some sort of hierarchy based on the country that releases the economic data. In general, US data are the most essential because the US has the world’s largest economy.

     “When the United States sneezes, the rest of the world catches a cold,” as the adage goes. 

    That’s only to emphasise how vital the US economy is. So, if the US economy goes well, it may produce a positive risk attitude (as long as the rest of the globe is performing well), and when the US data is excellent, the USD can actually decline, as we saw in 2020 coming out of the credit crisis. On the other side, poorer and weaker US data might contribute to negative risk sentiment, causing the USD to rise as a safe haven. For example, the market is now preoccupied with inflation figures.

    Why is this so? Because the US inflation rate is more than double the Fed’s objective of 2% per year and is continually rising. This, in turn, causes the market to price in a quicker tightening process by the Fed and all of the consequences that may result, such as an economic slowdown, policy mistake, recession, and so on. The market no longer cares about unemployment claims or some UK or EU statistics, for example, since what happens in the US will affect other markets.

    As you can see, there is more to consider when analysing economic data than just noting if the report is better or worse than predicted or whether the economic calendar indicates that the event is of low or high impact. To trade better economic releases, you need to have a larger perspective and filter what is significant in that specific situation.