Causation vs Correlation
Last week has been disastrous, in terms for what I predicted against what actually happened. Gold just continued ins upwards trend. Currently sitting at 1303 against the pound this weekend, looking at a bullish trend with nothing particularly influenctial happening this coming week, starting the 16th October.
As written in the title, I believe I completely misread the situation, As I thought what had happened the previous would strongly effect the direction of Gold. As the non-farm unemployment results came out better than expected 2 weeks ago I thought this would mean unemployment would be lower than expected, which I was correct about but I presumed this would mean CPI would be way higher than what was stated on the forecast and that is where I fucked up. The results on Friday 13th were all below the forecast rate. But I thought that the previous day and the US no-farm data would act as a causation but maybe there was a correlation that wasn't directly linked.
Therefore in regards to the CPI m/m, Core CPI m/m and retail sales m/m I was completely off. All the results except the Retail Sales m/m were below the forecast. Not by much, only 0.1% on each but enough because of the importance of these pieces of data to cause the price of Gold to sky-rocket. Moving up from 1295-1305 in the space of 15 minutes, fascinating how much these small changes to m/m data results are strongly effecting the market.
This was important to understand as I have been very naive, and assuming similar variables are causation to one another, but in many cases there is a correlation but doesn't actually mean they run parallel. For me personally, this is so helpful, letting me know something that happened last week could effect upcoming data but I need to know there is no certainly that it will effect the variables in question.
The week shall be interesting, tomorrow the only thing in my opinion of interest is the New Zealand CPI q/q results, I am in intrigued by this because the forecast is 0.4% more than last month, illustrating the potential for a strong upward trend in the exchange of this currency against numerous major currencies such as a dollar and Canadian Dollar.
Tomorrow I will provide more detailed analysis of the week ahead, Tuesday, Wednesday and Thursday offering opportunity so we shall see what happens.
Regards,
The Naive Trader
As written in the title, I believe I completely misread the situation, As I thought what had happened the previous would strongly effect the direction of Gold. As the non-farm unemployment results came out better than expected 2 weeks ago I thought this would mean unemployment would be lower than expected, which I was correct about but I presumed this would mean CPI would be way higher than what was stated on the forecast and that is where I fucked up. The results on Friday 13th were all below the forecast rate. But I thought that the previous day and the US no-farm data would act as a causation but maybe there was a correlation that wasn't directly linked.
Therefore in regards to the CPI m/m, Core CPI m/m and retail sales m/m I was completely off. All the results except the Retail Sales m/m were below the forecast. Not by much, only 0.1% on each but enough because of the importance of these pieces of data to cause the price of Gold to sky-rocket. Moving up from 1295-1305 in the space of 15 minutes, fascinating how much these small changes to m/m data results are strongly effecting the market.
This was important to understand as I have been very naive, and assuming similar variables are causation to one another, but in many cases there is a correlation but doesn't actually mean they run parallel. For me personally, this is so helpful, letting me know something that happened last week could effect upcoming data but I need to know there is no certainly that it will effect the variables in question.
The week shall be interesting, tomorrow the only thing in my opinion of interest is the New Zealand CPI q/q results, I am in intrigued by this because the forecast is 0.4% more than last month, illustrating the potential for a strong upward trend in the exchange of this currency against numerous major currencies such as a dollar and Canadian Dollar.
Tomorrow I will provide more detailed analysis of the week ahead, Tuesday, Wednesday and Thursday offering opportunity so we shall see what happens.
Regards,
The Naive Trader
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