We are adding a series of posts on Forex for the next few weeks because about 30% of the owners of the Futures Trading Secrets Course trade Forex. These posts are timely, so be sure to subscribe now.
This week is festooned with important global economic data releases. Which are the most prominent and how could they impact your Forex trading? To answer these questions, let us first identify key USA events because these ones have the most ability to influence the global financial markets with the impact of their results.
You will find that many acknowledged financial analysts will tend to focus on the USD Pending Home Sales due for release this Thursday 2nd September and the USD Change in Non-Farm Payrolls scheduled for posting on Friday 3rd September 2010. Why is the information concerning US housing and jobs so important you may well enquire? The reason for this is that this information provides clues to the well-being of the most critical item affecting the US economic status i.e. consumer confidence.
In order for a nation’s economy to project a positive and growing image, the general public most possess the ability to be able to purchase products produced by industry freely. Potential buyers can only do this if they are employed and/or they have access to readily available credit from either bank loans or home equity. As you may well know, this has hardly been the case lately since 2008 financial crash. US President Obama even made a speech this Monday emphasizing the intense efforts being made to provide new credit facilities for small US businesses in order to create new jobs.
What has all this got to do with Forex, you may ponder? Quite a lot is the simple answer? If the financial markets are deemed to be struggling, then investors adopt an increasingly risk-aversion stance. This development has the impact of forcing safe-haven currencies, such as the YEN, CHF and USD, to climb against the higher-interest yielders i.e. EUR, GBP, CAD and AUD etc. You can obverse this effect by studying the daily charts of all the major currency pairs. For instance, the CHF (Swissie) has surged by over 1000 pips against the Euro since just the early part of August 2010.
As you must acknowledge, this is a frightening powerful trend and you would be wise not to trade against it. So what should you expect from the important data releases due later this week? Let us look at a couple of scenarios in order to answer this question.
For instance, should both housing and jobs post figures better than expected then you should witness some degree of recovery in risk appetite, which will cause the higher yielding currencies to advance against the YEN and CHF. You are advised to monitor such developments by monitoring trading charts utilizing the daily time frame or higher. This is because their statistics and pivot points are of much higher quality than those associated with lower time frames. However, unless future economic postings provide further supporting positive growth evidence, then you should still regard these developments as temporary relief blips and not full-scale retractions.
Alternatively, if the data releases post results that are worse than anticipated, then you could witness further extensions of the current trends with the YEN and CHF appreciating against all the other majors. Please be sure to this visit this website later this week as further analysis will compare actual developments to those anticipated in this article.
About Bill
