2014-01-16 15:00 GMT (or 16:00 MQ MT5 time) | [USD - Philly Fed Manufacturing Index]
if actual > forecast = good for currency (for USD in our case)
Philly Fed Index Rises In January But Details Are Mixed
Manufacturing growth in the Philadelphia-area continued in January,
according to a report released by the Federal Reserve Bank of
Philadelphia on Thursday, with the index of regional manufacturing
activity rising by more than expected.
The Philly Fed said its
diffusion index of current activity rose to 9.4 in January from a
revised 6.4 in December, with a positive reading indicating an increase
in regional manufacturing activity. Economists had expected the index to
climb to 8.7.
While the index rose more than expected, Amna Asaf,
an economist at Capital Economics, said the details of the survey
suggest that manufacturing activity is a little bit softer than
indicated by the headline index.
Technical Analysis for GOLD (based on this article)
How Forex News Traders Use ISM Numbers (adapted from dailyfx article)
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 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
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
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.
Forum on trading, automated trading systems and testing trading strategies
Something Interesting in Financial Video August 2013
newdigital, 2013.08.09 17:15
A lesson on what this indicator is and what it tells us about the
manufacturing sector of the economy as well as its status as a leading
indicator of overall economic conditions.
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