Fundamental Report for the Week of May 9
Monday:
The Euro experienced a much needed and well timed recovery thanks to Germany’s phenomenal bump in Exports from 5.1% to 10.7%, crushing the market’s expectation of 3%. The gains couldn’t out pace the fear facing the market under such strained conditions, for the Euro specifically one word: Greece.
Driven by more risk aversion the New York session kicked the old trend-side movement into gear, however, with further buying of the USD and the JPY. Where the EUR/USD, EUR/JPY, GBP/USD and GBP/JPY all weakened on safe haven trading. Without the enthusiasm of last week, however, price stabled off by the Asian Session.
The USDCAD showed signs of a bounce off of former resistance, but merely consolidated.
The NZD weakened after a second fakeout above its daily trendline due to a poor showing in their credit card sales, going into negative territory, -1.7 from a previously posted 2.1.
Tuesday:
Euro-Zone and Britain both posted market beating numbers in their economic reports, but it did nothing to sway the risk averse and merely stabilized the the selling pressure.
Mid-morning NY Session news boosted the GBP and related pairs, however, as the world was informed that Britain was pulling out of any rescue efforts related to financially boosting Greece and also as Parliament began to firm up plans for their national election of a Prime Minister.
Similar to Monday, and proof of the market’s uncertainty the close of NY Session and open of Asian session resumed the previous trend of buying both USD and JPY.
Wednesday:
The consolidating EUR/USD was proof of the good news/bad news day for the EuroZone as the Euro tried to catch its breath after more selling action earlier in the week.
Like wise the GBP stabilized a bit after the dust has settled regarding their election results as well as some slight improvements in their Jobless Claims and Average Earnings.
The Kiwi did experience a bit of a rebound on positive BNZ Performance of Manufacturing Index, but it couldn’t override a longer term USD rally while the big players mostly stayed where they felt safest.
Thursday:
An undecided market consolidated across all of the majors. There was no real economic news to drive the market and the scare of a second global meltdown seems to have subsided.
Friday:
With the exception of the USD/JPY, the USD made new gains across the board. On rumors of potential long term political problems and possible EZ breakup the EUR/USD and the GBP/USD both broke through major psychological levels and I expect will see some retracement on Sunday before more USD buying ensues on Monday.
Next Monday:
- USD Empire State Manufacturing Survey (GDP and Employment)
- NZD Producer Price Index
Next Tuesday:
- GBP Consumer Price Index (CPI)
- GBP Retail Price Index (RPI)
- EUR CPI
- USD PPI
Next Wednesday:
- GBP Bank of England
- USD Consumer Price Index (CPI)
- CAD Wholesale Sales (Retail Sales)
Next Thursday:
- EUR Germany’s Producer Prices
- GBP Retail Sales
- CAD Leading Indicators
- USD Philly Fed Manufacturing Survey (GDP)
- NZD Visitor Arrivals
Next Friday:
- Nada
Triffany Hammond helps traders of all levels, gain the tools, resources and guidance necessary to build on their strengths and work around their weaknesses so that they can make the best possible decisions for themselves in the Forex Market. Triffany is a regular speaker and contributor at 
I don’t know about anyone else, but these weekly summary’s are brilliant, they really help me at the beginning of the next week to get an idea of who’s bubble is building up … and its actually not written in financial french !!! thanks a lot Triffany !!!!
What I’m about to say may be sacrilegious, but here goes … I think I trade better when I don’t look at fundamental news and I think I know why. Let me explain.
Fundamental news is time sensitive, whether restrospectively or prospectively. In other words, when the news is released it either has ALREADY had an an effect and the post news reaction is infact a reaction to the reaction; or else the news, while current has yet to be seized and acted upon by the market (I’m thinking, for example, of the current debt situations in Spain and Portugal which so far seems to have gone largely ignored).
With all of this, upon a news release, one must then consider:
1. Was the news good, bad, better or worse than expected?
2. Is the market expected to react ?
3. Has the market already reacted and are we seeing a ‘reaction to the reaction’?
4. If it hasn’t yet reacted, in what sort of a time frame is it expected to react?
5. Combining 1,2 and 3 – I guess the question becomes: ‘what phase of the news cycle are we in?’
… and point 5 is where I have stumbled in integrating fundamental analysis with my trading. It’s a question of timing. My analysis may be correct in the market perecption of the news but because I find I’ve judged the market to be at one phase of the news cycle when infact it is at another ultimately my trade goes against me.
I need to work on my timing of fundamentals with respect to trade initiaion. A thorough understanding and interpretation of fundamentals should enhance your trading. But till then I thin it’s safer for me to be a pure Price Action trader.
Just my two cents. Your thoughts?
It is certainly NOT sacrilegious to rule out fundamentals in your trading.
There are plenty of people that find the fundamentals just get in the way of their trading and have to rule it out.
It can be really difficult to take a technical signal when your fundamental analysis signals the opposite.
However, I have found that in the long term my fundamental analysis has helped me spot the changing tide. It has made it easier for me to understand when the larger market sentiment is shifting.
So…like with everything…to each his/her own. Because ultimately we have to do what is best for our own trading. Period.
Yeah fundementals can be confusing, its ok to watch them when your fundementals match the time frame you are in. I made the mistake of paying too much attention to short term goings on when i was trading long term … learned that lesson !
It’s also worth noting that sometimes the news takes charge of price action as the markets are waiting for the right piece of news, so then it is worth knowing, but sometimes once the market’s heard what it wants to hear, the big movers make their decisions and then its out of the news’ hands … take the EURUSD, there’s been enough news out that the market has made its decision about where they want this pair to go, and not much news can come out now to change things except maybe an alien invasion.
My 3 cents
“Ultimately we have to do what is best for our own trading” (Triffany) – totally sums it up for me.
Although it’s usually more applicable the greater the timeframe you’re trading, I believe it’s important to be aware of what’s on the economic calendar for the day and week. Helps to gauge market sentiment and possible movements.
I used to not even look at the economic calendar but nowadays it’s part of my routine to at least be aware of what’s coming out. I don’t do any specific analyses as such and still don’t know what a lot of them mean, CPI, PPI, ABC, XYZ etc etc…
That said, I do read a bit of commentary and pay close attention to the global market sentiment as a whole. Just this macro outlook and simple perusing of the menu each week, has made me a more ‘well-rounded’ trader. And for now, I’m content with that.
I love your comment yaqui …’CPI, PPI, ABC, XYZ ‘. Lol!
But yes yaqui, that’s just about what I do – be aware of what’s coming out. The announcements I pay closest attention to are Non-Farm Payroll and Interest Rate decisions on currencies of interest.
For Non-Farm I stay completely away from intiating a trade and if in a trade I exit prior.
For Interest Rate decisions I won’t initiate a position prior but if in a trade I may hold on.
I have made a few attempts (and will continue to) to become familiar with the ebb and Flow of fundamental analysis, as, like Triff says, it gives a good indication of future forks in the road.
Thanks Hutch, I have similar plans – anything in red on ForexFactory is a caution sign. And NFP = a long weekend. ;p
Absolutely, continual improvement is key.