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Forum on trading, automated trading systems and testing trading strategies
Press review
newdigital, 2014.06.05 14:54
2014-06-05 12:30 GMT (or 14:30 MQ MT5 time) | [USD - Unemployment Claims]if actual < forecast = good for currency (for USD in our case)
[USD - Unemployment Claims] = The number of individuals who filed for unemployment insurance for the first time during the past week. Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country's monetary policy.
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U.S. Weekly Jobless Claims Come In Above Expectations
While the U.S. Labor Department released a report on Thursday showing a modest rebound in initial jobless claims in the week ended May 31st, the four-week moving average still fell to its lowest level in about seven years.
The report said initial jobless claims rose to 312,000, an increase of 8,000 from the previous week's revised level of 304,000. Economists had expected claims to climb to 310,000 from the 300,000 originally reported for the previous week.
Meanwhile, the Labor Department said the less volatile four-week moving average dipped to 310,250, a decrease of 2,250 from the previous week's revised average of 312,500.
With the decrease, the four-week moving average fell to its lowest level since hitting 307,500 in the week ended June 2, 2007.
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EURUSD, M5, 2014.06.05
MetaQuotes Software Corp., MetaTrader 5, Demo
EURUSD M5 : 67 pips price movement by USD - Unemployment Claims news event
Forum on trading, automated trading systems and testing trading strategies
Press review
newdigital, 2014.06.05 19:44
EUR/USD Outlook Remains Bearish Below Former Support
Despite expectations for seeing another 215K rise in U.S. employment, the jobless rate is expected to increase to an annualized 6.4 percent from 6.3 percent in April, and a mixed batch of data print may continue to produce range-bound prices in the greenback as the Federal Reserve sticks to its current approach for monetary policy. At the same time, Average Weekly Earnings are projected to increase an annualized 2.0 percent during the same period following the 1.9% expansion the month prior, but we would need to see a marked pickup in wage growth to see a more material shift in the Fed’s policy outlook as Chair Janet Yellen retains a dovish outlook for inflation.
Forum on trading, automated trading systems and testing trading strategies
Press review
newdigital, 2014.06.06 07:29
ECB's Draghi Signals More Action If Needed
After announcing the historic move of cutting interest rates to negative territory on Thursday, European Central Bank President Mario Draghi said the bank is not over with action in its battle against sticky low inflation and stands ready to take non-standard measures, if required.
"The key ECB interest rates will remain at present levels for an extended period of time in view of the current outlook for inflation. This expectation is further underpinned by our decisions today," Draghi said in the introductory statement to his customary post-meeting press conference.
"Moreover, if required, we will act swiftly with further monetary policy easing. The Governing Council is unanimous in its commitment to using also unconventional instruments within its mandate should it become necessary to further address risks of too prolonged a period of low inflation."
Earlier on Thursday, the central bank cut its interest rates, taking the main refi rate to a record low 0.15 percent and the deposit rate into the uncharted negative territory at -0.10 percent. The ECB thus became the first leading central bank to adopt negative interest rates. The marginal lending rate was lowered to 0.40 percent.
Draghi also announced EUR 400 billion targeted longer-term refinancing operations, or TLTROs, that will mature in September 2018. Under the plan, financial institutions can borrow money from the ECB, totaling 7 percent of their total loans to the non-financial private sector.
The bank will conduct two successive TLTROs, in September and December 2014. The rate will be set at the main refi rate plus a fixed spread of 10 basis points.
Responding to questions from reporters, Draghi said the ECB has reached the 'lower bound' on interest rates for all practical purposes. However, "we are not finished yet", he said, adding that the bank is ready to undertake unconventional measures, if needed.
Today's ECB package was significant and the Governing Council was unanimous in its decision, Draghi said. He also said that the bank is confident that the latest measures will help to bring inflation close to 2 percent.
"In pursuing our price stability mandate, today we decided on a combination of measures to provide additional monetary policy accommodation and to support lending to the real economy," Draghi said.
Further, the ECB extended the existing eligibility of additional assets as collateral, at least until September 2018. Draghi also announced that the bank will intensify preparatory work related to outright purchases in the asset-backed securities, or ABS, market to enhance the functioning of the monetary policy transmission mechanism.
The ECB also decided to continue conducting the main refinancing operations as fixed rate tender procedures with full allotment for at least until the end of 2016. The bank will also suspend the weekly fine-tuning operation sterilizing the liquidity injected under the Securities Markets Programme.
Draghi also unveiled the latest ECB Staff macroeconomic projections. The growth forecast for this year was cut to 1 percent from 1.2 percent, while the projection for next year was raised to 1.7 percent from 1.5 percent. The forecast for 2016 was left unchanged at 1.8 percent. "The risks surrounding the economic outlook for the euro area continue to be on the downside," Draghi said.
Inflation projections were lowered through 2016. The inflation forecast for this year was slashed to 0.7 percent from 1 percent and the outlook for next year was cut to 1.1 percent from 1.3 percent. The projection for 2016 was reduced to 1.4 percent from 1.5 percent. The prediction for the fourth quarter of 2016 was also cut to 1.5 percent from 1.7 percent. The bank sees the risks to the inflation outlook as broadly balanced.
Draghi reiterated that policymakers do not see deflation risk in the euro area. However, the longer low inflation lasts, the higher will be the risks, he warned. The central bank is reacting to the risk of a period of low inflation, he said.
He also repeated that the euro exchange rate is not a policy target, but is important for maintaining price stability and growth.
Quizzed regarding the measure of large scale asset purchases, Draghi said an option that ECB has and will be considered, if needed.
Regarding concerns of savers, especially those in Germany, Draghi said their worries are taken very seriously and that interest rates will rise when growth returns.
Forum on trading, automated trading systems and testing trading strategies
Press review
newdigital, 2014.06.06 12:37
Trading the News: U.S. Non-Farm Payrolls (based on dailyfx article)
U.S. Non-Farm Payrolls (NFP) are projected to increase another 215K in May, but the data print may spur a mixed reaction in the EUR/USD as the jobless rate is expected to widen to an annualized 6.4% from 6.3% the month prior.
What’s Expected:
Why Is This Event Important:
Despite the ongoing improvement in the labor market, it seems as though the Federal Open Market Committee (FOMC) will stick to its current approach at the June 18 meeting, and we would need to see a marked pickup in NFPs to see a material shift in the Fed’s policy outlook at Chair Janet Yellen remains in no rush to normalize monetary policy.
The ongoing improvement in business sentiment along with the resilience in private sector consumption may encourage U.S. firms to further expand their labor force, and a positive development may spur a bullish reaction in the greenback as it puts increased pressure on the Fed to move away from its highly accommodative policy stance.
Nevertheless, the rise in planned job-cuts paired with the persistent slack in the real economy may ultimately generate a disappointing labor report, and a dismal print may heighten the bearish sentiment surrounding the reserve currency as it drags on interest rate expectations.
How To Trade This Event Risk
Bullish USD Trade: NFPs Climb 215K+; Unemployment Holds Steady
- Need to see red, five-minute candle following the NFP print to consider a short trade on EUR/USD
- If market reaction favors a long dollar trade, sell EUR/USD with two separate position
- Set stop at the near-by swing high/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
Bearish USD Trade: Job Growth, Jobless Rate Disappoint- Need green, five-minute candle to favor a long EUR/USD trade
- Implement same setup as the bullish dollar trade, just in the opposite direction
Potential Price Targets For The ReleaseEUR/USD Daily
- Failure to Close Above Former Support Favors Bearish Forecast
- Interim Resistance: 1.3770 (38.2% expansion) to 1.3780 (38.2% retracement)
- Interim Support: 1.3490 (50.0% retracement) to 1.3500 Pivot
Impact that the U.S. Non-Farm Payrolls report has had on EUR/USD during the previous month(1 Hour post event )
(End of Day post event)
EURUSD M5 : 48 pips by USD - NFP news event
U.S. Non-Farm Payrolls increased 288K in April following a revised 203K rise the month prior, while the jobless rate unexpectedly slipped to an annualized 6.3% from 6.7% as discouraged workers continued to leave the labor force. The better-than-expected NFP print pushed the EUR/USD back down towards the 1.3800 handle, but the market reaction was certainly short-lived as the pair ended the day at 1.3871.
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EURUSD, M5, 2014.06.06
MetaQuotes Software Corp., MetaTrader 5, Demo
EURUSD M5 : 36 pips price movement by USD - Non-Farm Employment Change news event