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THE MOVERS AND SHAKERS OF THE FOREX MARKET

THE MOVERS AND SHAKERS OF THE FOREX MARKET

Have you been wondering what causes the moves in the forex market? Perhaps you’ve done a technical analysis on a certain market and placed your trade but suddenly during the day the market shifts drastically in the opposite direction smashing your stop loss. You don’t have to worry any more. There’s a reason behind each move, be it a dip or a spike.

In this article and the next we’ll be shedding light on the various movers and shakers of specific markets. You’ll get to know what they mean,what to expect,how to trade and when they break out.

So what moves and shakes the forex market?

The price moves in the forex market are majorly data driven. The various macroeconomic statistics released by governments and monetary bodies is what drives the forex market.

Today we are going to dive into the US market; markets involving the US Dollar. They include:

Currency pairs: AUD/USD,EUR/USD,GBP/USD,USD/JPY, NZD/USD, USD/ZAR, CAD/USD,USD/CHF etc.

Stock Market: USCash100 or NAS100, US 30, NASDAQ etc.

Metals: XAU/USD (Gold), XAG/USD (Silver).

Each time fresh data from major US economic events is released, these markets react;they either move up or down depending on the impact in that market. Usually there are estimates (Expected values) from the US data. One key factor you need to note is that any data that if the fresh data is in favor of the USD, the dollar gains strength strength. On the contrary if the fresh data is not in favour of the USD, the dollar weakens.

 

Prerequisite Interpretations for Traders

For markets involving conversion to the USD (e.g AUD/USD,GBP/USD,EUR/USD,XAU/USD etc) if the dollar is strengthening these markets will crash/fall. On the contrary, if the USD is weakening these markets will rise/move up.

As for the currency pairs involving conversion from the USD (such as USD/JPY,USD/CHF,USD/ZAR, USD/CNY etc), if the dollar is strengthening these markets will rise and when the dollar is weakening, these markets will crash/fall.

For the stock markets such as USCash100,US 30 and others, when the dollar is strengthening these markets will rise/move up and when the dollar is weakening these markets will crash/fall.

The Movers and Shakers of the the US Market

1. The NFP (Non-Farm Payroll): USD Non-Farm Payroll is a monthly statistic representing how many people were employed in the US within the past month in the manufacturing sector,the construction sector and goods companies but excluding the number of people employed in the farming sector and non-profit organizations. NFP is released by the Bureau of Labor on the first Friday of each month. It’s a major indicator of the strength the US economy and the USD in general.

Previous release date: September 3rd Value: 235K.

Next release date: 8th October. Expected Value: 500K.

Traders should note that a higher than expected figure implies strength or bullishness for the USD whereas a lower than expected figure indicates weakening or bearishness for the USD.

2. The ADP Non-Farm Employment Change: is another indicator related to the NFP. It is a monthly statistic indicating the change in non-farm,private employment based on the payroll data of about 400,000 US business clients. It’s usually released 2 days before the NFP is released. Analysts argue that it’s also used to gauge what to expect on the NFP.

Previous release date: September 1st Value: 374K

Next release date: October 6th  Expected Value: 475K

A higher than expected figure is considered bullish or strengthening the USD whereas a lower than expected figure is considered as negative, bearish and weakening the USD.

 

That’s all for today, I hope this article is informative and useful to you. Don’t forget to check in tomorrow for the continuation on the same.

 

References 

Bureau of Labour and Statistics

 

Disclaimer: The contents of this article are only for educational purposes and do not constitute financial advice. Ensure you research and consult before making any trading or investment decisions.

 

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