Archive for Advanced GDP

Euro Dollar Fundamental News – 27th February 2009

Friday, February 27th, 2009

As equity markets extend their short term rally, and the currency markets continue to exhibit abnormal behaviour across all the majors and some of the crosses, today’s lack of news is hardly likely to help! The professional traders that I speak to on a daily basis are increasingly standing back from the euro to dollar market, which continues to move in an unpredictable way intra day, yet consolidating all the while into a falling wedge, or sideways pennant, depending on your viewpoint and timescale. With little news out today of any significance we can expect more of the same, particularly with the weekend ahead and traders ( such as there are ) squaring off positions. Trading volumes are often thin on a Friday adding to the volatility in the markets.

So far this morning in Europe we have had the German Preliminary CPI data ( which came in at 0.6% against a forecast of 0.3% ), the European CPI figures for both Core ( 1.6% against a forecast of 1.8%), General CPI ( bang on forecast at 1.1%), and finally the Unemployment Rate which came in at slightly over forecast at 8.2% ( forecast 8.1%). With a mixture of good and bad figures here, the euro to dollar initially fell, and has since rallied slightly to it’s current level of 1.2658.

The only significant fundamental news out today is in the US at 1.30 UK time, and these are the Preliminary GDP figures. These are prepared by the Bureau of Economic Analysis and measure the annualized change in the value of all goods and services produced by the economy. If the actual is better than forecast then this is generally good for the US dollar. The numbers are released quarterly, about 60 days after the end of the period, and whilst it is a quarterly report, it is actually provided in an annualized format. In other words the data sets are multiplied by  four. As you may know, there are three versions of GDP released a month apart, namely the Advance, the Preliminary, and the Final. The Advance release is the earliest and thus tends to have the most impact, but even so these figures will move the currency once released as they provide a broad measure of economic activity and the primary gauge of the nation’s health ( or not in this case!)

Euro To Dollar – Fundamental News January 30th 2009

Friday, January 30th, 2009

The main fundamental news out today will be the advance GDP figures for the US, due for release at 1.30 this afternoon ( UK time), which measures the annualized change in the value of all goods and services produced by the US economy. Whilst the data is produced quarterly it is actually reported in an annual format, and to confuse matters further, ( well this is economic data!!) there are actually three versions released which all cover much the same thing, but a month apart. The first is the advance, then the preliminary and finally ( guess what) the final. The advance is of course the first ( and earliest) and tends to have the most impact, as later reports simply confirm the picture. In simple terms if the actual is better than the forecast then this will be good for the home currency, the US dollar. The forecast for this afternoon is -5.4% against a previous of -0.5%. According to Bloomberg news this morning : ” The U.S. economy probably nosedived in the final months of last year, a trajectory that’s likely to continue in early 2009 as soaring unemployment wallops consumer spending, economists said before a government report today. Gross domestic product contracted at a 5.5 percent annual pace from October through December, according to the median estimate of 79 economists surveyed by Bloomberg News. It would be the biggest drop since 1982 and follows a 0.5 percent decline the previous three months.”

As I said earlier, this is a significant release, and likley to be bad, but the question ofcourse for us as traders is, has the market factored in an appalling set of figures already – indeed we saw this happen in Japan last night, with very little reaction to some awful fundamental economic data for the Japanese yen. If you are going to trade the news, as always I suggest you wait for the first five to ten minutes, let the markets settle, and then take an opposite position to the market direction, with a wide stop in place. If you would like to view the euro vds dollar from a technical point of view, please just follow the link here. Good luck today, and have a great weekend.

Euro To Dollar – Fundamental News January 26th

Friday, January 23rd, 2009

With very little in fundamental data for the euro to dollar pair today, I thought I would look ahead to next week, and highlight the main numbers being released in Europe and the US. We start on Monday in the US with the Existing Home Sales figures, which is the annualized number of residential buildings that were sold during the previous month, but excluding new construction. The forecast here is for 4.4million against the previous month’s 4.49 actual. This is a leading indicator of the health of the economy, and therefore an early signal of any significant changes, and in terms of it’s effect on the currency, if the numbers are better than expected,then this is generally good news.

Moving on to Tuesday, we have two sets of data being released, which are both significant for the respective currencies of the euro and the US dollar, and in particular the euro to dollar pair. First up is the German IFO business climate report. This is a highly respected report, principally because of the large sample size, and also its close correlation both with the German economy and as a reliable indicator throughout Europe, so it can have a dramatic impact on the euro, and hence the euro to dollar. It is a composite index and the survey covers manufacturing, building, wholesaling and retailing. The previous month was 82.6 with a forecast of 81.0 this time. If the actual is over the forecast then this will be seen as positive for the currency. In the afternoon we move to the US and the CB ( Conference Board ) figures on consumer spending. This is another leading indicator which uses a survey of 5000 households to gauge consumer confidence. Again it is released monthly and if the forecast numbers are exceeeded then this is positive news for the currency. The previous figure was 38.0 with a forecast of 37.90 for Tuesday.

On Wednesday morning, we have very little in Europe to affect the euro, but in the afternoon/evening in the US everyone will be waiting for the FOMC statement, which certainly can, and does move the currency markets, and ofcourse the euro vs dollar pair. The release is actually two pieces of news or data at the same time. The first is the FOMC statement, which is scheduled 8 times per year and is the primary tool that is used to communicate with investors about future monetary policy, which is why currency traders ( and others ) pay such close attention. First of all, the statement contains the outcome of the vote on interest rates and a commentary about the economic conditions that influence the vote, but more importantly it considers the economic outlook for the future, and will often provide an early signal for the future direction of interest rates. As the statement changes from month to month, it is these changes that traders will focus on, in particular in order to spot any changes in sentiment or to look for clues to the future. The usual effect on the currency is that a hawkish statement will be seen as positive. Alongside the FOMC statement, we also have the Fed Funds Rate, which is the rate at which banks lend to one another overnight. The rate is forecast to remain at 0.25% and is often factored into the market before it is announced, and in many cases the news is overshadowed by the FOMC statement. If the actual is greater than the forecast then this is generally good for the currency.

After the excitement of Wednesday, Thursday morning in Europe has several announcements, including German Unemployment, Consumer Confidence and Money Supply, but these are generally only considered as minor items of fundamental data. The US povides the key data in the afternoon with the Core Durable Goods, and New Home Sales. The first of these measures the change in the total value of new purchase orders placed with manufacturers for durable goods, and is therefore a significant leading indicator of the economic well being of the country and a barometer of the economy moving forward. The actual last month was 0.6% and the forecast for this month is (-2.5%) – if the actual is better than forecast then this is positive for the currency. The other significant data comes from New Homes Sales, which as the name suggests is the annualized number of new homes sold during the previous month. Again it is a leading indicator and if the actual exceeds the forecast, provides a boost to the currency. The forecast this time is for 410,000 against last month’s actual of 407,000.

Finally on Friday we have the last significant piece of fundamental news which comes in the afternoon from the US and is the Advance GDP figures, which are released quarterly, and provide a broad measure of economic activity. The advance release is the first indication of GDP, and therefore tends to have the most impact on the currency. Last time the figure was (-o.5%) with a forecast this time of (-5.0%).

I hope the above is useful and I will be updating all the figures during the week in individual posts as the currency markets react to the news, so please check back regularly. If you prefer to trade from a technical viewpoint, I do have a seperate site which provides a view of the euro vs dollar from a technical perspective, so please just follow the link – good trading and see you next week – Anna