Importance of Interest Rates
As stated in the previous article, there are quite a few data releases this week(exciting I know), with all bar two coming from the US.
Wednesday is showing a busy afternoon for the releases of US data. Firstly the ADP Non-Farm Employment change which is showing a very strong figure, of 191k, well above last month. I have decided to pick this out as it could lead to a further strong rally of the dollar on Wednesday, because there are other very positive data releases all in the afternoon. Next we have the Manufacturing PMI, this is showing a forecast the same as last month and its not the important so I am going to move over it, but I shall see pay attention when its released.
Only 15 minutes after this, the ISM Manufacturing PMI is released which is showing growth but it is below last months result of 60.8 at 59.4. This isn't a huge change, and because its still above the base index value of 50 its showing growth, which is good for an economy and a currency.
At the same time as this the Construction Spending m/m and ISM manufacturing Prices are released. These aren't huge factors in shifting a market but their forecasts are both somewhat below previous the previous month, Construction Spending is expected to be negative at -.3%. Which is 8% below last month. While the ISM Manufacturing Prices are down as well.
This could hinder the rally of the dollar considering the potential positive data releases stated in the previous paragraph. This might set up quite a volatile period of the dollar as they are released within a few hours of each other. Thus meaning Golds position might bounce around quite alot Wednesday if forecasts are correct but as always normally 1 forecast is off, therefore anything could happen.
However the most important piece of information on Wednesday is the decision by the FED in regards to the Federal Funds Rate, it is expected to continue at 1.25% but any change could lead to an even further amount of volatility. If the forecast is correct and I reckon it is, it should instil greater confidence in the Dollar and hopefully helping push Gold further into a bear position.
Thursday now, and the most interesting release of data isn't the US for once ayyyyyyy. Mr Carney and co. will decide whether to chage interest rates. However it is looking like for the first time in 10years they will hike rates, from 0.25% up to 0.5%. Which is a very interesting position to take, I am not sure exactly why this is happening, the British economy is experiencing the lowest unemployment figures for years however with the uncertainly of Brexit I believe this could hinder growth in the Economy. As always I hope I am wrong. But this hike is good the GBP, meaning it might lead to rally in the cable market on Thursday which could hinder our Gold position. I do doubt this just because of all the strong US data releases this week and therefore I don't believe this change will lead to much effect in the market.
On to the US, we have the weekly Unemployment Claims release, which is looking above last week by 2k. Pretty small numbers but is does have an effect, I don't really how many majors this will effect when released, but as always it will continue to lead to greater volatility in the cable market.
At the same time the Prelim Nonfarm Productivity q/q and the Prelim Unit Labour Costs q/q are released. Both forecasts are nicely above previous quarters by 0.7% and 0.3% respectively. Which means Thursday could be another good day for the downfall of Gold.
Last but not least we have Friday. First we have the UK's Services PMI, expected to be below last month but barely, at 53.3 compared to last months 53.6(Forex Factory, 2017). What is important here is that the number is above the index neutral value of 50, thus meaning we are looking at an expansion in the economy. This will effect the cable for sure, and therefore could lead to a dip in Gold if the forecast is met or exceeded. Yet I doubt it will last because the afternoon is offering numerous important economic data from the US which is looking quite stable, thus potentially removing the effect of the UK's data.
4 important pieces of Data from the US are released at the same time on Friday, we have the : Average Hourly Earnings m/m, Non-Farm employment change m/m, Unemployment Rate and the monthly Trade Balance.
Hourly Earnings are showing a fall compared to last month, with forecast at 0.2%, while the Non-farm employment change is huge, I had to go check it from different sources as I thought there was genuine mistake! Forecast is showing a result of 311k compared to last months decline of -33k(Investing.com, 2017). This could do massive damage to the cable, maybe a new low this week, who knows. But this is very good for a short on Gold. Could make big profit then.
But also released we have the unemployment rate and Trade Balance which aren't showing much change, but being an Economic student I see this as very interesting. It really highlights the current economic development of a country, with the US being such a powerhouse, the data can really shift markets everywhere which is incredible. Unemployment is looking to stay at 4.2% while the trade balance is moving by just over a billion which is huge money but nothing really in terms of the US economy, could buy 5 Neymars for that!!
But anyway I don't see much move away from a rallying dollar with all these results, but it does depend how much the actual results for the falling forecasts are from whats expected.
But to finish the week off, late Friday afternoon the US release their monthly Non-Manufacturing PMI, which is looking below last release at 58.3. So as always there is expansion just a little bit slower, so it will be interesting to see how much this affects the cable.
For Gold, it seems good to continue the downward trend, currently its just fluctuating within a very small margin so it shall be interesting how much the data later in the week affects the direction. Outside factors such as Spain's political struggle is playing strongly still and therefore may counter a strong dollar rally because people buy up Gold to counter to instability in Spain.
Anyway, we shall see what happens,
The Naive Trader.
Wednesday is showing a busy afternoon for the releases of US data. Firstly the ADP Non-Farm Employment change which is showing a very strong figure, of 191k, well above last month. I have decided to pick this out as it could lead to a further strong rally of the dollar on Wednesday, because there are other very positive data releases all in the afternoon. Next we have the Manufacturing PMI, this is showing a forecast the same as last month and its not the important so I am going to move over it, but I shall see pay attention when its released.
Only 15 minutes after this, the ISM Manufacturing PMI is released which is showing growth but it is below last months result of 60.8 at 59.4. This isn't a huge change, and because its still above the base index value of 50 its showing growth, which is good for an economy and a currency.
At the same time as this the Construction Spending m/m and ISM manufacturing Prices are released. These aren't huge factors in shifting a market but their forecasts are both somewhat below previous the previous month, Construction Spending is expected to be negative at -.3%. Which is 8% below last month. While the ISM Manufacturing Prices are down as well.
This could hinder the rally of the dollar considering the potential positive data releases stated in the previous paragraph. This might set up quite a volatile period of the dollar as they are released within a few hours of each other. Thus meaning Golds position might bounce around quite alot Wednesday if forecasts are correct but as always normally 1 forecast is off, therefore anything could happen.
However the most important piece of information on Wednesday is the decision by the FED in regards to the Federal Funds Rate, it is expected to continue at 1.25% but any change could lead to an even further amount of volatility. If the forecast is correct and I reckon it is, it should instil greater confidence in the Dollar and hopefully helping push Gold further into a bear position.
Thursday now, and the most interesting release of data isn't the US for once ayyyyyyy. Mr Carney and co. will decide whether to chage interest rates. However it is looking like for the first time in 10years they will hike rates, from 0.25% up to 0.5%. Which is a very interesting position to take, I am not sure exactly why this is happening, the British economy is experiencing the lowest unemployment figures for years however with the uncertainly of Brexit I believe this could hinder growth in the Economy. As always I hope I am wrong. But this hike is good the GBP, meaning it might lead to rally in the cable market on Thursday which could hinder our Gold position. I do doubt this just because of all the strong US data releases this week and therefore I don't believe this change will lead to much effect in the market.
On to the US, we have the weekly Unemployment Claims release, which is looking above last week by 2k. Pretty small numbers but is does have an effect, I don't really how many majors this will effect when released, but as always it will continue to lead to greater volatility in the cable market.
At the same time the Prelim Nonfarm Productivity q/q and the Prelim Unit Labour Costs q/q are released. Both forecasts are nicely above previous quarters by 0.7% and 0.3% respectively. Which means Thursday could be another good day for the downfall of Gold.
Last but not least we have Friday. First we have the UK's Services PMI, expected to be below last month but barely, at 53.3 compared to last months 53.6(Forex Factory, 2017). What is important here is that the number is above the index neutral value of 50, thus meaning we are looking at an expansion in the economy. This will effect the cable for sure, and therefore could lead to a dip in Gold if the forecast is met or exceeded. Yet I doubt it will last because the afternoon is offering numerous important economic data from the US which is looking quite stable, thus potentially removing the effect of the UK's data.
4 important pieces of Data from the US are released at the same time on Friday, we have the : Average Hourly Earnings m/m, Non-Farm employment change m/m, Unemployment Rate and the monthly Trade Balance.
Hourly Earnings are showing a fall compared to last month, with forecast at 0.2%, while the Non-farm employment change is huge, I had to go check it from different sources as I thought there was genuine mistake! Forecast is showing a result of 311k compared to last months decline of -33k(Investing.com, 2017). This could do massive damage to the cable, maybe a new low this week, who knows. But this is very good for a short on Gold. Could make big profit then.
But also released we have the unemployment rate and Trade Balance which aren't showing much change, but being an Economic student I see this as very interesting. It really highlights the current economic development of a country, with the US being such a powerhouse, the data can really shift markets everywhere which is incredible. Unemployment is looking to stay at 4.2% while the trade balance is moving by just over a billion which is huge money but nothing really in terms of the US economy, could buy 5 Neymars for that!!
But anyway I don't see much move away from a rallying dollar with all these results, but it does depend how much the actual results for the falling forecasts are from whats expected.
But to finish the week off, late Friday afternoon the US release their monthly Non-Manufacturing PMI, which is looking below last release at 58.3. So as always there is expansion just a little bit slower, so it will be interesting to see how much this affects the cable.
For Gold, it seems good to continue the downward trend, currently its just fluctuating within a very small margin so it shall be interesting how much the data later in the week affects the direction. Outside factors such as Spain's political struggle is playing strongly still and therefore may counter a strong dollar rally because people buy up Gold to counter to instability in Spain.
Anyway, we shall see what happens,
The Naive Trader.
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