Daily Financial Market News & Discussions

Welcome to “Daily Financial Market News & Discussions.” This thread is dedicated to sharing and discussing the latest news that affects the financial markets. From CPI reports to NFP numbers and FOMC meetings, we aim to keep each other informed and engage in meaningful conversations about how these events shape market trends. Join us to stay updated and share your insights!

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Although the week is almost over, we still have some significant news pending: PPI and unemployment claims.

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Today’s High Impact USD News

  • Core PPI

  • PPI

  • Unemployment Claims

Producer Price Index (PPI)
Measures the average change over time in the selling prices received by domestic producers for their output. It is a leading indicator of consumer price inflation, as higher production costs can lead to higher prices for consumers.

Yesterday, I watched Jerome Powell for the first time and took away the following key point from the conversation:

  • If upcoming data indicates that inflation is cooling down, then rate cuts are likely to follow.

PPI Impact on DXY (PPI & Core PPI)
High PPI/Core PPI: Indicates rising inflationary pressures which leads to expectation that the Federal Reserve will raise interest rates to control inflation. (personally I don’t expect this scenario to play out but if it does I will be expecting short term bullish DXY)

Low PPI/Core PPI: Indicates cooling inflationary pressures which leads to the expectation that the Federal Reserve might lower interest rates to keep inflation in check. (If this plays out I will be expecting short term bearish DXY)

Unemployment Claims
Unemployment claims refer to the applications for financial assistance made by individuals who have recently lost their jobs and are seeking temporary income support from the government.

This is a crucial economic indicator that provides insights into the health of the Labor Market

Unemployment Claim impact on DXY
High Unemployment Claims: Indicates a weakening economy which can lead to a weaker dollar. This is because high unemployment suggests economic distress, prompting expectations that the Federal Reserve will keep interest rates low to stimulate economic activity.

Low Unemployment claims: Indicate economic strength, which can lead to a stronger dollar. This is because low unemployment suggests robust economic activity, prompting expectations that the Federal Reserve might raise interest rates to control inflation, attracting investors and leading to a bullish DXY.

Personal Expectations
I anticipate high unemployment rates and low PPI & Core PPI figures. This outlook supports my current bearish stance on the DXY. However, I will remain adaptable and allow the data to guide my decisions.

Hello guys, what are your thoughts on todays upcoming News?

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Interesting data, I will crunch the data at EOD but overall I think the data shows that inflation is cooling therefore I expect short term bearish DXY

After yesterday’s delivery on the DXY, I had to reevaluate how I analyzed the recent economic news data (Core CPI, CPI, and Unemployment Claims).

My mistake was analyzing the data independently. As a rookie in fundamentals, I need to learn to view the bigger picture. However, as long as I continue learning every day, I know I will improve.

For those curious about how I’m educating myself on fundamentals, I’m combining YouTube videos and ChatGPT. It’s an effective and fast way of learning.

The New Approach:
I analyzed all USD news released this week as a single unit to get a better picture of the fundamentals.

  • Core CPI m/m: 0.2% (Previous: 0.3%, Forecast: 0.3%)
  • CPI m/m: 0.0% (Previous: 0.1%, Forecast: 0.3%)
  • CPI y/y: 3.3% (Previous: 3.4%, Forecast: 3.4%)
  • Federal Funds Rate: 5.50% (Previous: 5.50%, Forecast: 5.50%)
  • Core PPI m/m: 0.0% (Previous: 0.3%, Forecast: 0.5%)
  • PPI m/m: -0.2% (Previous: 0.1%, Forecast: 0.5%)
  • Unemployment Claims: 242K (Previous: 225K, Forecast: 229K)

After analyzing all the data as a unit, I realized there was uncertainty in the market regarding whether the Federal Reserve would increase or decrease interest rates. This was reflected in the Federal Funds Rate, which remained unchanged at 5.5%.

This indicates that the Federal Reserve is not yet convinced that inflation is cooling down. Therefore, I will be on the lookout for future news regarding inflation.

Adapting Trading Tactics to Market Uncertainty
With fundamentals being uncertain, I will rely on technical analysis to get in and out of positions. I will scalp the market until there is a clear sentiment change fundamentally before looking for any swing trades.

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Today’s USD News

  • Prelim UoM Consumer Sentiment

  • Prelim UoM Inflation Expectations

What is the news about?
Today’s data is a consumer focused data, aimed at showing what the consumers think about inflation and the overall health of the economy

Today’s data will be crucial in trying to figure out what the federal reserve will do. I hope the news brings out some needed fundamental clarity

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Been thinking of learning about fundamentals to compliment my technical analysis…any YouTube channels you can suggest for me to learn from? @SAN_The_Trader

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Right now im focusing on https://www.youtube.com/@Realkenchigbo and https://www.youtube.com/@clearvaluetax9382/videos YT-Channel.

Though they don’t really teach fundamentals but they give their interpretation of what is going on fundamentally in the market. I prefer the second channel

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Jev is doing great with Capital hungry. https://www.youtube.com/c/CapitalHungry

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Yeah, Capital Hungry is a good source of info too regarding fundamentals

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Next Week’s News

Note that Wednesday is a Bank Holiday (USD). Personally I will not trade any USD Pair or Indices on this day

Good Luck and I wish you all the best.

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Today News

Empire State Manufacturing Index (ESMI)

This is a monthly survey of manufacturers in NY done by the Federal Reserve bank of NY, it provides insights into the economic health and inflationary trends in the manufacturing sector. (High manufacturing costs are usually transferred to consumers and vice versa).

Data Interpretation:

  • Declining ESMI Data Month-over-Month: A month-over-month decline in the Empire State Manufacturing Index indicates a weakening economy potentially leading to USD depreciation.
  • Increasing ESMI Data Month-over-Month: A month-over-month increase in the Empire State Manufacturing Index indicates a strengthening economy potentially leading to USD appreciation.

In summary a decline in ESMI data today could mean bearish USD and an increase could mean bullish USD. Remember to interpret the data based on the overall data available to get a better picture of what is happening fundamentally to USD.

Good luck traders

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Increase in ESMI data indicating strengthening economy.
I will expect a bullish weekly candle on DXY. unless there is a significant change fundamentally

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TODAY’S NEWS

  1. Core Retail Sales m/m

  2. Retail Sales m/m

Core Retail Sales m/m

Core Retail Sales measures the change in the total value of sales at the retail level, excluding automobiles. This data is used to gauge retail spending. (Automobiles are excluded due to its price volatility)

Significance of CRS m/m data

  1. Economic Health: higher retail sales suggest increased consumer confidence and spending which is positive for the economy.
  2. Inflation Indicator: Strong retail sales can lead to higher demand for goods and services, potentially driving up prices and contributing to inflation.
  3. Consumer spending indicator: Consumer spending accounts for a large portion of the overall economic activity.

Impact of CRS m/m on the Economy

  • Positive Data: Indicates strong consumer spending, which is good for the economy. This may prompt central banks to consider raising interest rates to curb potential inflation
  • Negative Data: Indicate weaker consumer spending which can be a sign of economic trouble. Central banks might consider lowering interest rates to stimulate spending.

My Expectations
I am currently anticipating a bullish weekly candle on the DXY, positive Data would support this view.

Retail Sales m/m

Retail Sales measure the change in the total value of sales at the retail level, including all types of goods and services. This figure includes automobiles, making it more comprehensive than the Core Retail Sales figure.

Retail Sales report helps analysts and investors gauge the health of the economy and any inflationary pressures that may exist.

Significance of Retail Sales m/m data

  1. Broad Measure of Consumer Spending: Retail Sales provide a broad measure of consumer spending patterns across all types of goods and services, including big-ticket items like cars
  2. Economic Indicator: Like Core Retail Sales, this indicator reflects the overall economic health. Strong retail sales suggest robust economic activity, while weak sales indicate potential economic slowdown.

Impact of Retail Sales m/m on the Economy

  • Positive Data: Indicates strong consumer spending, which is good for the economy. This may prompt central banks to consider raising interest rates to curb potential inflation
  • Negative Data: Indicate weaker consumer spending which can be a sign of economic trouble. Central banks might consider lowering interest rates to stimulate spending.

My Expectations
I am currently anticipating a bullish weekly candle on the DXY, positive Data would compliment this view.

Good luck in your trading today :saluting_face:

Remember to be flexible, let the news plot the path

Today’s News

USD Bank Holiday

Expect Low volatility on USD pairs.

TODAY’S NEWS

I usually research USD news only but I have decided to add GBP today since I have already covered Unemployment Claims before, I will still do it again, repetition has its benefits.

Today we are going to learn a new concept: Interest Rate Differentials

Unemployment Claims

Unemployment claims refer to the applications for financial assistance made by individuals who have recently lost their jobs and are seeking temporary income support from the government.

This is a crucial economic indicator that provides insights into the health of the Labor Market

Unemployment Claim impact on DXY

High Unemployment Claims: Indicates a weakening economy which can lead to a weaker dollar. This is because high unemployment suggests economic distress, prompting expectations that the Federal Reserve will keep interest rates low to stimulate economic activity.

Low Unemployment claims: Indicate economic strength, which can lead to a stronger dollar. This is because low unemployment suggests robust economic activity, prompting expectations that the Federal Reserve might raise interest rates to control inflation, attracting investors and leading to a bullish DXY.

Monetary Policy

This is an announcement made by the central bank about its plans for managing the economy. It includes decisions on interest rates, money supply, and other measures aimed at controlling inflation and stimulating economic growth.

The central bank can decide to either Increase Interest rate or Decrease interest rate. Increasing Interest Rates will make the affected currency attractive to investors which will lead to an increase in the value of the currency while decreasing the interest rate will make the currency less attractive to investors which will make the currency lose value

Official Bank Rate

This is the interest rate set by the central bank. It influences the cost of borrowing money for businesses and individuals.

A higher official bank rate tends to make borrowing more expensive, which can slow down economic activity and decrease inflation. Conversely, a lower official bank rate can encourage borrowing and spending, potentially leading to higher inflation.

INTEREST RATE DIFFERENTIAL

Since we will be getting crucial data today (GBP Official Bank Rate), it is essential that we understand interest rate differential as this will help us in interpreting the data well relative to other currency interest rate.

Interest Rate Differential:

  • Definition: The difference in interest rates between two countries or regions.
  • Example: If the U.S. interest rate is 2% and Japan’s is 0.5%, the differential is 1.5%.

Impact on Economy and Currency Value:

  1. Foreign Exchange Rates:
  • Higher Interest Rate: Attracts investors, leading to increased demand for the currency and potential appreciation.
  • Currency Appreciation: Can result from higher demand for a currency due to its higher interest rate.
  • Capital Flows: Higher interest rates attract foreign capital, strengthening the currency.
  1. Investment Decisions:
  • Investors: Prefer countries with higher interest rates for better returns on investments.
  • Borrowing Costs: Companies and governments prefer to borrow from countries with lower interest rates to minimize costs.

Example in Practice:

  • Carry Trade: Investors borrow in low-interest-rate countries and invest in high-interest-rate countries to profit from the differential, affecting currency values and capital flows.

I hope you have learnt alot from this short research, have a blessed day and remember to follow your rules and strategy :saluting_face: :wink: :wink:

Interest Rate Differential Tradingview Indicator

Hey everyone, I’ve stumbled upon a fantastic tool on TradingView that I believe you’ll find incredibly useful. It’s an indicator specifically designed to display both the interest rates and interest rate differentials, right at your fingertips.

Take a glance at the lower-left corner of the image. You’ll notice a table showcasing the current interest rates for both the EUR and USD currencies. But what makes this tool truly valuable is its ability to calculate the interest rate differential between these two currencies, in this case, EURUSD.

Imagine the insights you can gain! With this tool, you can effortlessly identify which currency pairs in your watchlist offer the most enticing interest rate differentials. It’s a goldmine for anyone conducting research or looking to optimize their trading strategies.

Link to the Tradingview indicator

Click on this text

Have a blessed day :wink:

We still have a few minutes before the GBP Interest Rate news. we can use Swiss franc as a case study to see what the effects of interest rates were on the pair USDCHF. CHF interest rate news was released today during the Asia Session.

CHF Interest Rate Data

From the data above, we observe that the interest rate was reduced from 1.5% to 1.25%. When interest rates are lowered, the currency tends to become less attractive to investors. Investors typically seek the highest returns (money seeks yield), and in the case of USDCHF, the USD, with its higher interest rate of 5.5%, presents a more appealing investment opportunity.


Interest Rate Differential on USDCHF before the news

USD Interest Rate = 5.5%
CHF Interest Rate = 1.5%
Interest Rate Differential = 5.5% - 1.25% = 4%


Interest Rate Differential on USDCHF after the news

USD Interest Rate = 5.5%
CHF Interest Rate = 1.25%
Interest Rate Differential = 5.5% - 1.25% = 4.25%

The positive change in the interest rate differential increases the attractiveness of the USD relative to the CHF.


Effects on USDCHF

During the London session, we observed a significant bullish movement in USDCHF, which was triggered by the recent CHF interest rate adjustment. The delayed reaction likely stems from the fact that the news was initially released during the Asian session.


GBP Interest Rate News Data

Previous interest rate maintained. I will be expecting continued bearish delivery on GU.

Good Luck traders :saluting_face: