Press review - page 369

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GBP/USD Intra-Day Fundamentals: UK Manufacturing PMI and 18 pips price movement

2016-02-01 09:30 GMT | [GBP - Manufacturing PMI]

if actual > forecast (or previous one) = good for currency (for GBP in our case)

[GBP - Manufacturing PMI] = Level of a diffusion index based on surveyed purchasing managers in the manufacturing industry.

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  • UK Manufacturing PMI at three-month high of 52.9 in January
  • Improved domestic demand supports expansion of output
  • Input cost deflationary pressure remains strong

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GBPUSD M5: 18 pips price movement by GBP - Manufacturing PMI news event :


 

EUR/USD Intra-Day Fundamentals: ISM Manufacturing PMI and 16 pips price movement

2016-02-01 15:00 GMT | [USD - ISM Manufacturing PMI]

if actual > forecast (or previous one) = good for currency (for USD in our case)

[USD - ISM Manufacturing PMI] = Level of a diffusion index based on surveyed purchasing managers in the manufacturing industry.

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"The January PMI® registered 48.2 percent, an increase of 0.2 percentage point from the seasonally adjusted December reading of 48 percent. The New Orders Index registered 51.5 percent, an increase of 2.7 percentage points from the seasonally adjusted reading of 48.8 percent in December. The Production Index registered 50.2 percent, 0.3 percentage point higher than the seasonally adjusted December reading of 49.9 percent. The Employment Index registered 45.9 percent, 2.1 percentage points below the seasonally adjusted December reading of 48 percent. Inventories of raw materials registered 43.5 percent, the same reading as in December. The Prices Index registered 33.5 percent, the same reading as in December, indicating lower raw materials prices for the 15th consecutive month. Comments from the panel indicate a mix ranging from strong to soft orders, as eight of our 18 industries report an increase in orders, and seven industries report a decrease in orders."


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EURUSD M5: 16 pips price movement by ISM Manufacturing PMI news event :


 

GBP/USD Intra-Day Fundamentals: UK Construction PMI and 44 pips range price movement

2016-02-02 09:30 GMT | [GBP - Construction PMI]

if actual > forecast (or previous one) = good for currency (for GBP in our case)

[GBP - Construction PMI] = Level of a diffusion index based on surveyed purchasing managers in the construction industry.

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"January  data  pointed  to  a  renewed  slowdown  in output  growth  across  the  UK  construction  sector.  At 55.0,  down  from  57.8  in  December,  the headline seasonally  adjusted Markit/CIPS  UK  Construction Purchasing Managers’ Index® (PMI®) remained well  above  the  50.0  no-change  value,  but signalled the  slowest  rate  of  expansion  since   April  2015. Moreover,   aside   from   the   pre-election   slowdown recorded last year, the latest reading was the lowest since  June  2013.  A  number of  survey  respondents noted that softer new business growth had  acted as a brake on output growth and staff hiring at the start of 2016."

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GBPDUSD M5: 44 pips range price movement by UK Construction PMI news event :


 

Forum on trading, automated trading systems and testing trading strategies

Press review

Sergey Golubev, 2014.06.06 09:25

3 Steps to Trade Major News Events (based on dailyfx article)

Talking Points:

  • News releases can be stressful on traders
  • Develop a plan before the event arrives
Major news releases can be stressful on traders. That stress can show up for a variety of trading styles.
Perhaps you are already in a good position with a good entry and you are afraid the news release may take a bite out of your good entry.

Perhaps you want to enter into a new position as prices are near a technically sound entry point, but you are uncertain if the technical picture will hold up through the volatile release. Therefore, you agonize over the decision of whether to enter now or after the news event.

Maybe, you like to be in the action and initiating new positions during the release. The fast paced volatility during the news release still gets makes your palms sweat as you place trades.

As you can see, news events stress traders in a variety of ways.

Today, we are going to cover three steps to trade news events.


Step 1 - Have a Strategy

It sounds simple, yet the emotion of the release can easily draw us off course. We see prices moving quickly in a straight line and are afraid to miss out or afraid to lose the gains we have been sitting on. Therefore, we make an emotional decision and act.

Having a strategy doesn’t have to be complicated. Remember, staying out of the market during news and doing nothing is a strategy.

A strategy for the trader with a floating profit entering the news event could be as simple as “I am going to close off half my position and move my stop loss to better than break even.”

For the trader wanting to initiate a new position that is technically based, they may decide to wait until at least 15 minutes after the release, then decide if the set-up is still valid.

The active news trader may realize they need a plan of buy and sell rules because they trade based on what ‘feels good.’

Step 2 - Use Conservative Leverage

If you are in the market when the news is released, make sure you are implementing conservative amounts of leverage. We don’t know where the prices may go and during releases, prices tend to move fast. Therefore, de-emphasize the influence of each trade on your account equity by using low amounts of leverage.

Our Traits of Successful Traders research found that traders who implement less than ten times effective leverage tend to be more profitable on average.


3 - Don’t Deviate from the Strategy

If you have taken the time to think about a strategy from step number one and if you have realized the importance of being conservatively levered, then you are 90% of the way there! However, this last 10% can arguably be the most difficult. Whatever your plan is, stick to it!

If I put together a plan to lose 20 pounds of body weight that includes eating healthier and exercising, but I continue to eat high fat and sugar foods with limited exercise, then I am only setting myself up for frustration.

You don’t have to be stressed or frustrated through fundamental news releases.


 

NZD/USD Intra-Day Fundamentals: GlobalDairyTrade Price Index and 26 pips price movement

2016-02-02 13:53 GMT | [NZD - GDT Price Index]

if actual > forecast (or previous one) = good for currency (for NZD in our case)

[NZD - GDT Price Index] = Change in the average price of dairy products sold at auction. It's a leading indicator of the nation's trade balance with other countries because rising commodity prices boost export income.

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NZDUSD M5: 26 pips price movement by GlobalDairyTrade Price Index news event :


 

USD/JPY Intra-Day Fundamentals: BOJ Gov Kuroda Speaks and 11 pips price movement

2016-02-03 02:30 GMT | [JPY - BOJ Gov Kuroda Speaks]

BOJ Gov Kuroda speaks speak at the Kisaragi-kai meeting, in Tokyo: Introduction of "Quantitative and Qualitative Monetary Easing with a Negative Interest Rate".

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USDJPY M5: 11 pips price movement by BOJ Gov Kuroda Speaks news event :


 

GBP/USD Intra-Day Fundamentals: UK Services PMI and 38 pips price movement

2016-02-03 09:30 GMT | [GBP - Services PMI]

if actual > forecast (or previous one) = good for currency (for GBP in our case)

[GBP - Services PMI] = Level of a diffusion index based on surveyed purchasing managers in the services industry.

==========

GBPUSD M5: 38 pips price movement by UK Services PMI news event :


 

Forum on trading, automated trading systems and testing trading strategies

Press review

Sergey Golubev, 2014.01.17 15:52

How Forex News Traders Use ISM Numbers (adapted from dailyfx article)

  • The Institute for Supply Management (ISM) was founded in 1915 and is the first supply management institute in the world.
  • Servicing 40,000 business professionals in more than 90 countries, ISM focuses on supply chain management.
  • Forex traders rely heavily on ISM’s release their Purchasing Managers Index (PMI) on the first business day of each month to gauge economic growth.

NZDUSD M5 : 17 pips prrice movement by USD ISM Manufacturing PMI :


What is ISM?

A country’s economy is as strong as its supply chain. The Institute for Supply Management (ISM) measures the economic activity from both the manufacturing side as well as the service side. Formed in 1915, ISM is the first management institute in the world with over 40,000 members in 90 countries. Since it can draw from information gathered from the surveying its large membership of purchasing managers, the ISM economic news releases are carefully watched by Forex traders around the world as a reliable guide to economic activity.


ISM Surveys

ISM publishes three surveys; manufacturing, construction, and services. Published on the first business day of the month, the ISM Purchasing Managers Index (PMI) is compiled from surveys of 400 manufacturing purchasing managers. These purchasing managers from different sectors represent five different fields; inventories and employment, speed of supplier deliveries, production level, and new orders from customers.

XAUUSD M5 : 3345 pips price movement by USD - ISM Non-Manufacturing PMI news event :



In addition, ISM construction PMI is released on the second business day of the month, followed by services on the third business day. Forex traders will look to these releases to determine the risks at any given time in the market.

EURUSD M5 : 37 pips price movement by USD - ISM Non-Manufacturing PMI news event :


Forex Market Impact

The Manufacturing and Non-manufacturing PMI’s are big market movers. When these reports come out at 10:30 AM ET, currencies can become very volatile. Since these economic releases are based on the previous month’s historical data gathered directly from industry professionals, Forex traders can determine if the US economy is expanding or contracting.

Forex traders will compare the previous month’s number with the forecasted number that economists have published. If the released PMI number is better than the previous number and higher than the forecasted number, the US dollar tends to rally. This is where fundamental and technical analysis comes together to create a trade setup.

AUDUSD M5 : 21 pips price movement by USD - ISM Non-Manufacturing PMI news event :


In the example above, notice how the better than expected PMI number triggered a US dollar rally against the Euro. As seen in the chart above of the EURUSD, the ISM Non-Manufacturing was not only above 50 but at 55.4, beat the forecasts calling for a drop from 54.4 to 54.0.

When an economic release beats expectations, like in the example above, sharp fast moves can result. In this case, EURUSD dropped 22 pips in 15 minutes. Traders often choose the Euro as the “anti-dollar” to take advantage of capital flows between two of the largest economies.

The Euro zone has a large liquid capital markets which can absorb the huge waves of capital seeking refuge from the U.S. So a weak US ISM Non-Manufacturing number usually leads to a dollar sell-off and a rise in the Euro. Another scenario is when the number released is in line with forecasts and/or unchanged from the previous month, then the US dollar may not react at all to the number.

AUDUSD M5 : 32 pips price movement by USD - ISM Manufacturing PMI :



Overall, an ISM PMI number above 50 indicates that the economy is expanding and is healthy. However, a number below 50 indicates that the economy is weak and contracting. This number is so important that if the PMI is below 50 for two consecutive months, an economy is considered in recession.

PMI’s are also compiled for Euro zone countries by the Markit Group while US regional and national PMIs are compiled by ISM. As you can see, traders have good reason to pay special attention to the important releases from the Institute of Supply Management.

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Trading News Events: US ISM Non-Manufacturing (based on the article)

A slowdown in the ISM Non-Manufacturing survey may produce headwinds for the greenback and spur a near-term rally in EUR/USD as fears of a slowing recovery dampens bets for a Fed rate-hike in the first-half of 2016.

Why Is This Event Important:

Even though the Federal Open Market Committee (FOMC) appears to be on course to implement higher borrowing-costs, mixed data prints coming out of the U.S. may encourage the central bank to endorse a wait-and-see approach at the March 16 interest rate decision as the ongoing slack on the real economy undermines the Fed’s scope to achieve its 2% inflation target over the policy horizon.

Nevertheless, improved confidence accompanied by the pickup in the housing market may generate pickup in private-sector activity, and a stronger-than-expected ISM print may boost the appeal of the greenback as it reinforces Fed expectations for a consumption-driven recovery in 2016.

How To Trade This Event Risk
Bearish USD Trade: ISM Non-Manufacturing Slips to 55.2 or Lower
  • Need green, five-minute candle following the ISM print to consider a long EUR/USD trade.
  • If market reaction favors a bearish dollar trade, buy EUR/USD with two separate position.
  • Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward.
  • Move stop to entry on remaining position once initial target is hit; set reasonable limit.
Bullish USD Trade: U.S. Service-Based Activity Unexpectedly Picks Up
  • Need red, five-minute candle to favor a short EUR/USD trade.
  • Implement same setup as the bearish dollar trade, just in the opposite direction.
Potential Price Targets For The Release
EURUSD Daily


  • The diverging paths for monetary policy casts a long-term bearish outlook for EUR/USD, but the pair may attempt to break out of the triangle/wedge formation carried over from the previous month should the ISM report push market participants to push out bets for the next Fed rate-hike.
  • Interim Resistance: 1.1052 (November high) to 1.1090 (50% retracement)
  • Interim Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% expansion)
 

EUR/USD Intra-Day Fundamentals: ADP Non-Farm Employment Change and 45 pips price movement

2016-02-01 01:45 GMT | [USD - ADP Non-Farm Employment Change]

if actual > forecast (or previous one) = good for currency (for USD in our case)

[USD - ADP Non-Farm Employment Change] = Estimated change in the number of employed people during the previous month, excluding the farming industry and government.

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EURUSD M5: 45 pips price movement by ADP Non-Farm Employment Change news event :


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