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Showing posts with label Article Fundamental. Show all posts
Showing posts with label Article Fundamental. Show all posts
Geopolitical Analysis on Forex Market
December 22, 2021

Geopolitical Analysis (Reasons)

- Main people interests
- Intervention

Geopolitical Analysis on Forex Market

The Geopolitical Reasons may be many of you will ask what just it means.

But Geopolitical reasons are all reasons to have movements on the market caused in real-time by speeches and interest of some key people around the world, as Presidents, Finance Ministers, Presidents of Banks and key cooperation’s. All sudden events happen around the world.

The terrorist attacks by 11th September 2001 are also geopolitical reasons that caused big movements on the forex markets. To geopolitical analyses also come events as agreements and contracts among countries organizations, companies, worldwide events like natural disasters terrorist attacks, earthquakes, fires, floods, and so on.

All events caused as geopolitical could have serious influence over the market for a long time ahead, but with sure for a very short time, the event causes big movements on the markets. It is necessary for every trader before to start to trade to follow the world news using some news agency like CNN and Bloomberg and every news to come in real time to him. The fast reaction on the forex market is the most important for success.

Never leave the news to go out without paying attention at least to the headlines. Waiting and watching every scheduled speech of people like presidents, finance ministers, and other key people like Alain Greenspan. They always tell hide words to the markets that will follow their words further.

The forex market is and the most dynamic market, every professional trader is the person who knows everything that happens around the world (events that could cause movements on the markets).

Why is so important to follow such news? Let’s take one example. There is an attack over pipeline of oil somewhere in the world (Iraq, Libia).

This attack on the pipeline if it is serious and is causing serious damages it could delay important supplies for some economies. This economy will have a deficit of oil for short time and will be necessary to search for new ways to deliver the oil in the country.

The new ways and new company delivering the oil will make the expenses higher and the country will separate more money for oil supply. Giving more money for something not planned in the budget will cause a deficit for short time and that deficit will cause the national currency to be weaker. Such examples could be given much. So never go to trade without a real-time news agency around you!

The main people's interests

There are many people who want to see the currency trading at the level where they want to see it. But only a few people could do that what they want. They could try and succeed but not always in maximal. First of all the Finance ministers could do what they want, even without flooding the market with big sums.

They simply said in an interview with them that won't do happen something and their words are supported knowing that they could flood the market with some bought and sold of currency to make the desired level of the trading.

Such movement on the market is very useful when some country management wants to improve the economy or to do some new rules and to put in some levels the economic growth of the country. Many countries want to see their currency weaker.

In this way, they will increase the export of the country-based manufactures and make the growing reality in the near future. The economic development of all countries passes through growth and fall off. When the countries go to strong growth the management of the country wants to decrease the power of the economy and by this way want strong national currency.

And when the country is in fall then the management wants weak national currency to make the exporters competitors on the world market. Other peoples also have an interest in moving the market to one or another level.

For example, see just you. If you have at the moment euros, but you have to pay somewhere in dollars and the euro is a weak currency then you will lose too much. In this way, the big companies trading on the world market also want to move the market and by this currency, differential to win, because the difference on the currency market is too much.

For example, the EUR/USD trading range by average 0.83 to 1.19 is equal to $ 0.36 lose for every dollar or for $ 100 000 the loss is $36 000. So the big companies are ready to come on the market and to game with big money to move the market to the level that they want. Therefore is important to know and to watch all reactions by the companies.

Interventions

One of the end steps on the forex market is the intervention. For minutes you can make millions or for minutes even second to bankrupt. Many traders are doing that and many will do that if not use the main rules on the forex market. Never trade on the market without stopping losses. You can leave take profit level open, but always place stop losses. One example by the near pass will show to you what risk takes any trade without to place stop losses.

One of the biggest massive interventions on the forex market was by September 2000 when the European Central Bank together with the Bank of Japan and some American banks make a strong intervention. Then we trade USD/DEM and by the level of 2.2950 the trading move to 2.21 for only fifteen minutes.

More than 800 pips for 15 minutes is equal to USD 10 000 with a margin of 1:100 to USD 80 000 profit or loss of the whole sum. How for 15 minutes on the market could make you invest money multiplied by 8. No other market does not provide so big profits for so short time.

But the forex market and is the riskiest and the big risks are the sudden interventions. The interventions are happening rarely but happen once they make serious movements on the market. At least 100 pips is the movement on the market by one intervention and an average of 150/160 pips movement by intervention done by the biggest banks like the European Central Bank, Bank of Japan Bank of England, and the Federal Reserve.

The companies also intervene in the market to realize their interests. But they if make a big movement on the market it not happen for a short time how it happen if intervention ECB, BOJ, BOE, or the Federal Reserve.

The interventions by the side of the biggest banks are not sudden. Always somewhere is talking for expecting intervention, or first is talking for intervention and if the market is not accepting the risk of intervention they the banks move to the realization of the intervention.

Also, the markets are full of rumors for intervention. Then the trading stays very nervous and on the market have big movements even before the intervention. The traders have to use the following strategy. Make the plan where last is made the intervention if is made in the recent month. The banks will want to keep the trading level far away by this level and any closing will mean to expect intervention.

When place positions place the stop losses are always close to the current level and accept that at any moment you could lose all money by the current level to stop losses level. When you see that the market moving strongly in the direction of the expected intervention, then go in positions with the intervention and also place stop losses closer average of 30/50 pips away by the current price. The intervention power will be about 100 pips and make the calculation stop on time. After the intervention the market is quiet and the movements stop.

Slowly recovery to the recent level could follow. Then the next intervention level could be different. The strategy used by the Central Banks to intervention is to use the good technical moments to support the intervention and by not big traders.

Then with little sum is possible to make a bigger effect on the market. The last calculations show that moving 50 pips on the market is equal to the intervention of $ 50 billion. The banks before doing the intervention make serial of talks and consultations for supporting the intervention because of how big and powerful to be one bank it is necessary to help to move the biggest market in the world.

The most important conclusion from this lesson is to understand that interest moves the market, and the key speeches of top people and combined with the interest have a big influence over the movements on the market.

To be in a step with all events by this kind the traders could watch and follow the news live, providing with them live news agency.

Forex Economic Indicators
December 22, 2021

Forex Economic Calendar

Average Hourly Earnings – The data show the average working salary. The indicator could show the potential inflation pressure connected with the value of the working force. The data come every first Friday of every month together with nonfarm payrolls at 8:30 AM EST.

Balance of Trade – The data give the difference between the national export and import. The most important is that a positive balance of trade is positive for the economy and is expected to strengthen the national currency.

Beige Book – The Federal Reserve public it eight times for the year, as Beige Book contains information for the economic and business conditions. The data coming by the bank sector in different forms of analyzing by interviews by economists experts and others. The Beige Book comes usually two weeks prior to each FOMC meeting. The indicator is in the help of the FOMC to make the decision for the interest rates. As the interest are the most important for the traders, the Beige Book data has to be considered as a very important element before the real interest rates decision.

Building Permits – The data come monthly and is the same as Housing starts but show the permits for the building while the Housing start shows the real start of the buildings. The key control of the housing start and permits come by the interest rates level.

Business Inventories – The data show the volume of the stores of enterprise load and semi-manufactured articles. The increasing data during the month could mean a standstill in the economy. The data come once in the middle of the month at 8:30 AM EST.

Capacity Utilization – The data come to show how the economy and the enterprise are utilization and the middle value is 81 – 83 %. The greater number led to higher prices (PPI) and proves to be inflationary.

Chicago PMI – It is a very important index for the Chicago area for business activity. The market usually reacts to that data. The index shows the enterprises and the stores available. The level of 50 is key and above 50 is reading for expanding economy. The index is published by Purchasing Manager Association in Chicago and comes on the last day of the month at 10:00 AM EST.

Consumer Credit – It is an indicator for the consumers and for the credit taken by the consumers taken for a long time. When the data is higher it is talking about overheating the economy. The data have season fluctuations. The data come once monthly at 3:00 PM EST.

Consumer Confidence – One of the most important indexes comes monthly at the end of the month and shows the level of spending and consummation in the USA. The index is very important because two-thirds of the GDP in the USA come from consumers. The data come once monthly about the 20th of the month at 10:00 AM EST.

Consumer Price Index (CPI) – It is data for the inflation of typical consumers. There are fixed baskets with goods that every month CPI gives the data what is the level of the consumer price index. There is and Core CPI that is a measurement of the true inflationary where are excluding the foods and energy items.

Construction Spending – The data come once monthly on the first working day of the month at 10:00 AM EST. The data give the spending in the construction sector. In most cases, bigger spending means a growing economy and is positive news for the economy.

Current Account – This economic indicator gives data for International trading and is the broadest measurement of the sales of goods, services interests, and unilateral payments and transfers.

Durable Goods Orders – The data come once monthly in the last week of the month at 8:30 AM EST. It gives the big bought as capital goods like machines, equipment, and transport defense orders, cars, furniture, and so on. Data is one of the important factors for the development of the economy. Some defense orders could make big volatility in the data so is better to watch the data in a bigger period and the local monthly changes to not accept all the time as key.

Employment Cost Index (ECI) – ECI measures the changes in employee wages and salaries. The data do not include the federal government workers. Not always rising ECI is accepted as positive, and it means by the condition of the economy. If ECI is higher but the economy is weak, sometimes it could be negative, because the industry will have less money for investments and so on.

Factory Orders – The data come once monthly as Durable Goods orders one week earlier. It is one of the most difficult data to forecast and is extremely volatile. It gives the orders for shipments of non-durable goods, manufacturing inventories, and inventory sales ratio.

FED FOMC meeting – One of the most important if not and the most important event connected with the changes of the Interest rates. After the decision, a few days later is making a protocol public with the reasons for the decision called Minutes of the FOMC. The market reacts to this news with very big movements as the key are the rumors starting months before the meeting even.

Gross Domestic Products (GDP) – One of the most important data for every economy is GDP. It gives the measure of the market gods and service produced in a country. The components of the GDP are four: consumption, investments, net exports, and government purchases. The releases of the data have three parts: Advance release, preliminary release, and final release.

GDP Deflator – The index is in analogy with the CPI index and shows the changes in the prices of all including in GDP.

Help Wanted Index – This index comes once monthly every last Thursday of the Month at 10:00 AM EST and shows the requests for help connected with empty working places not finding a suitable specialist. A sometimes higher value of the index could sign for higher inflation as the absence of working specialists could push higher salaries.

HICP – The Harmonized Index of Consumer Prices come from the EuroZone and is the main measure for inflation. All countries try to keep the inflation at in possible range and to not extend of 2.0% for the countries in the EuroZone. Negative inflation with mark minus is much more negative than bigger inflation and mean deflation.

Housing Starts – The data come monthly and show how many new houses are starting to build, as are divided into single and multi-family categories. The most import for rising housing starts come when the interest rates are low, and when the rates are higher the housing starts are lower.

IFO – IFO is the most important economic indicator for Germany. The data come monthly and show the business conditions in Germany. The markets’ most important indicator shows and gives the real picture of the economic activity.

Industrial Production – The data come once monthly and measure the percentage changes in the volumes of the output of factories, mines, and utilities.

Initial Jobless Claims – The data come every Thursday of the month at 8:30 AM EST and show how many new social requests are sent. It is one of the most important indicators for monthly Unemployment. The critical level accepted by the market is 400K.

Implicit Deflator – The data measure the inflationary component in the GDP report.

ISM Index – The index comes from the Institute for Supply management. It is the former National Association of Purchasing Managers (NAPM). The report comes on the first working day of the month and gives detailed data for the sector of the manufacture before coming to the key employment report. The market moves after that news-making real picture about the expecting employment data. ISM is the leading survey on US manufacturing activity. The key for ISM is level 50. Below 50 the data mean that the economy is in negative development and above 50 that the economy expands.

ISM Service – Only a few months ago the index was known as the ISM nonmanufacturers index. It is the same as the ISM index with the difference that the index shows the situation in the services sector – non-manufacture sector. Also, the level of 50 is key as ISM Index, and also reading above 50 is positive for the sector. The market also reacts to the news and is one of the most important.

Leading economic indicators – It is a component of 10 different indicators and gives the data for aggregate economic activity. The included data in the indicator come from various sectors as manufactures, buildings, finance, retails, and consumers. The data but is not so important for the market and the effect is little.

New Home Sales – The data come once monthly and show the new home sales for the four main geographical areas in the USA. The report includes information on the home prices and the number of houses sales. It is a crucial segment in economic activity because the changes in spending affect growth. Often but the reports contain big volatility.

Non-farm payrolls – The data come together with the US Unemployment data every first Friday of the new month at 8:30 AM EST. The data is more important for the traders by the Unemployment level and shows how many new working places are adding to the economy or is losing. With minus is the loss and with plus the adding working places. The data show more clearly than the Unemployment look in the future because adding new jobs mean that for the future the economy will develop having a more working place. The data is measured in real working places. For example, if the economy adds 115 000 new working places the index will be 115K, or when lose for example 115 000 the index will be –115K.

Personal Income – The data come once monthly and show all changes in the wages, salaries, proprietors income, income from rents, dividends interest social, and unemployment payments.

Personal Spending – The data come once monthly and show the changes in spending for goods services by individuals and is the largest component of GDP.

Philadelphia Fed Index – The index shows the business activity in the Philadelphia region. It is one of the key data for a key economic region in the USA. The data come about the 18th of every month at 10:00 AM EST.

Producer Price Index (PPI) – The data is realized once monthly and shows the changes in wholesale prices. Also, Core PPI is realized with PPI and shows the true picture of the inflationary forces as excluding the highly volatile foods and energy items.

Productivity – The data measure the change in the number of goods and services produced per unit of input. It is a key indicator for the economy and is accepted as important by the markets.

Purchasing Managers Index (PMI) – The index is used by Germany, Japan, and the UK and is equal to the ISM index for the USA. It is used to assess business confidence. The index gives data for the manufacturing and services industries.

Retail Sales – The data come once monthly. It measures the percentage monthly changes in receipts of retail sales stores and includes durable and non-durable goods. It is a real indicator of the strength of consumer expenditure. The markets accept the indicator as one of the keys to the economy.

Unemployment – Is one of the key indicators for the economy. It gives the real percent of the active people that are not occupied with work. The data come once monthly every first Friday of the start of the new month at 8:30 AM EST. It is one of the most important data that come together with US Non-farm farm payrolls. Also with the news come and other data as average hour’s earnings.

University of Michigan Consumer Confidence – The data come once monthly to give the real business activity and the confidence of the consumers in the future. The index has two characters showing the nowadays conditions – sentiment index and the expecting conditions – expectations index. The index is one of the most important for the economy.

Wholesales Inventories – The index shows the goods store. The index is connected with the selling and the remaining production in the stores. Up of the index mean some difficulties in the stores and not fast-selling production happens when having some standstill in the economy. The data come about the 10th every month at 10:00 AM EST.

Forex Fundamental Analysis
December 22, 2021
Forex Fundamental Analysis

The main economic reading how good is one economy come by the fundamental factors. On the forex markets, the fundamental factors are the most important measurement for analyzing the market and making how short such and long time forecasts are. There is a big serial of fundamental factors as watching all data and all indicators the traders could confuse totally.

This lesson describes the secret of how to read the fundamental factors and how to use the news even before it comes.

The USA is the biggest economy and the fundamental factors of the locomotive of the world economy are very important. The news by the USA has a big influence over the markets around the world. Therefore the first key for success is: Do not miss the economic data by the USA!

But many traders are much more confusing watching the fundamental data and realize big losses by that. The most important for the economic data is to be fast. You have to think much more than to all rest. As the forex market is the market where the news come first even faster than CNN you have to be with the news to be a successive trader.

The key for the trading is to have a look ahead over the expecting events. The expecting events and the expecting data is one of the main factors moving the markets. Watching the events at least 48 hours ahead even one week ahead is a good period.

Make your plan for the expecting events, and the following statistics. See in details the last data for some events and the forecasting data for this event. Spot all events where the expecting data is different by last month. How the difference is bigger such bigger movement is possible to expect on the market. If to some event ahead have other events first watching the closer events, but combine the closer events with the events further ahead. Find this event that shows much more for the economy and is an important economic event.

Later we will stop your attention to these events that have a big influence on the markets. One of the most important analyzing the expecting events and the movements in the forex market is the changes in the expecting forecast. During the last 24 hours when the event news will come, the forecast could change too much by the first expectations. You have to find how the expecting forecast change in what directions.

Even little changes make big movements because the traders find starting trends in these events and make speculations to extend the movements on the market and the profits. For these economic analyses and forecasts, you can find on many web site in sectors' economic calendar. But few are the main organizations making such investigations to give forecasts about the level of the expecting economic events. And these are Briefing, Bloomberg, Dealers votes some banks and others.

When the event stays known then is the second period of the trading. The volumes on the market stay 3-5 times more than normal for a short time. For about 4-6 minutes the market has very big volumes and the movement is serious. Then is better to use at least 35 pips to stop losses for trading due to the big movements in both directions.

How the expectations of the traders if in the last days even hours before the event data to stay know are moving like a trend, when the data come with the same as expecting value then the market back to the last positions a few hours ago.

For example if is expecting better data for the US economy and finally this data is the same as expecting we will see not rising the US dollar and losing a dollar. This is the most important moment when the traders make the big losses.

And next the last moment when the data is over and is broadly announce and is reached to all traders, then the market start to work in a new different way. The news is analyzing how such economic data just is mean, whether the economy is on the right way or not.

At least ten minutes after the event then start the trend on the market affected by the news. This is the real trend and in the first 5-10 minutes there is no clear trend in most cases. In the first couple of minutes, the traders try to make the big movements and to extend the profits.

Only in cases when the realizing news is meaning then the forex movement is in one direction. For example the expecting Unemployment is 6.0% and the data come as 6.2% it means that with sure the market will move against the dollar.

The next case on the market is when after the data comes, have to come new data for another sector. In this case, the market waits and does not move so much to make the movement in trend. The traders prefer to wait to see and next data before opening positions and to catch up with the starting trend.

There are many economic indicators analyzing and giving the condition of the economy. Some of the indicators are not so important, others are very important. In the next lesson we will analyze the most important economic indicators.

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