FUNDAMENTAL NEWS RELATIONSHIPS This requires that you understand how each news release is released with one another. I will try to list a few below, but I don’t think I can cover everything… but once you know what you are looking for, you will get used to these relationships: Here is a list of news release relationships. Usually when the first news release is better than expected, expectations will start to build prior to the second news release for better than expectation figures. This will help you to identify the market trends and possibly enter on a sentiment trade. 1. PPI -> CPI: A high PPI will affect market sentiment towards a better CPI release. 2. Retail Sales -> GDP: Retail sales in emerging countries such as the US makes up about 2/3 of the market. If Retail Sale is good, then possibly we will see better GDP. 3. Unemployment, Jobless Claims, Unemployment rate -> Retail Sales: If people are losing jobs, they will not have money to spend at the retail levels, therefore affecting the GDP as a whole. 4. Housing Data -> Durable Goods: Especially in the U.S., a higher housing data will have a positive effect on durable goods because more people buy new houses equals to more people buying new appliances. 5. PMI -> GDP and General Economy: Purchasing Manager Index, such as UK Manufacturing PMI, U.S.’s I SM Manufacturing PMI , Canada’s IVEY PMI, all have an effect on the future GDP and the health of economy. 6. ADP -> NFP: U.S. ADP has an impact on the expectation of NFP. But if we get an extremely out of norm reading, like NFP is expecting -50K and we get a +80K on ADP, then traders will probably just ignore this, thinking it is probably a mistake.
Posted on: Tue, 27 Jan 2015 03:32:53 +0000
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