Equities Seem to be Driving Forex Pair Movement
Good Morning,
It is nice when we have an ancillary market driving the market we are trading. Right now, it seems equities are driving forex pairs.
Before we get into that, let's talk big picture. Global equity markets are doing well, but at least in the US's case, the equity markets seem to be going up when oversold and when Bernanke speaks. Other than that, we have been pretty flat for a few weeks now and 1420 in SPX is strong resistance.
Looking at this weeks economic data, unemployment claims were a little worse than expected (need more data to see if they are flatlining or starting to trend back up). I wonder about college graduates looking for jobs in a few months... CHIPM, released today, came in a bit softer, but not by much. but, new orders dropped significantly and most importantly, the Employment Index which slid from 64.2 to 56.3, the biggest drop since February 2009, and virtually all job gains in 2012 have now been given up.
This is the fundamental data that helps a trader understand the larger economic data at work, even though it is taking a back seat to government and central bank intervention.
The point is, technically, can the equity markets sustain themselves at these high levels if economic data stagngates/worsens.
If you don't know how to dig into the economic data to find the sub-components, you need to dissect your economic calendar after looking at the webinars that IBFX provides. Here is the link: http://www.youtube.com/playlist?list=PL928F4D24203A3621&feature=plcp
Let's see where the equity markets close today and let's also see where the GBP/USD closes as it is at a very interesting level - it is at/above the recent highs in the 1.6000 handle, but if it closes off its highs, around 1.5980, it will still be in a "range".
A very, very busy data calendar next week, so stay tuned to a Sunday evening or Monday morning post with an outlook for the week. Could we see more flat to negative economic news? Will it matter as traders and investors are still relying on the federal reserves around the world to pitch in?
Trading Psychology Reminder: It is end of the day, end of the month and end of the quarter. How do you want to go out/be set up for a busy week, busy start to the month, quarter and what I think will be a much more volatile market, providing more opportunities for a mentally ready trader!
Happy Trading and Be Environmentally Cool
Coach Brian
Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
