It is well accepted in Forex that
timing is important. But there are a number of elements to timing – the need to
be aware of the days on which volatility inducing events, such as the Non-Farm
payroll report or FED day, occur; seasonal factors like the hiatus that can
grip the markets during some of the summer months; even the day of the week at
a time when there are no market moving events; and the opening of the important
sessions in London and New York, or the Asian session.
The chart above shows the reactions
of the market to some of these in the last two trading days, yesterday, Monday
17th and Friday, Nov 14th. At 14:55 GMT on Friday the
Reuters / University of Michigan Consumer Sentiment Index came in better than
expected, but instead of assisting the Greenback against the Euro, it appeared
to be a case of “buy the rumour and sell the news”, as the EURUSD pair appreciated
(meaning the dollar lost comparatively). This was in the aftermath of slightly
better than expected Eurozone GDP figures earlier in the day.
Yesterday the open of both the London
and New York sessions stood out and were anticipated by the Asian session, when
there was a belated reaction to the Consumer Sentiment news out of the US,
which turns out to have achieved a seven-year high. The US dollar finally had
its time in the sun. Catching these moves requires careful attention, or the
assistance of an algorithmic routine, such as Mandelbrot.
Today’s
reports
Reports that could have an effect on
the market today include inflation figures for the UK, which will be released
at 9:30 GMT, the well-respected ZEW survey on economic sentiment in Europe and
the Fonterra milk auction in New Zealand, which is always closely watched for
signs about the health or otherwise of the Kiwi (NZDUS pair).
Inflation in the UK will be
particularly important, as the remarks of the governor of the Bank of England,
Mark Carney, have left little doubt that he and his colleagues will be using
this as an important indicator to inform their decisions about future core
interest rate rises, which are crucial for the expected value of the pound
Sterling in the Forex markets.
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