Foreign Exchange Trading (FOREX): Analysis

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Foreign Exchange Trading (FOREX)Analysis
ManagementEconomic Indicators

• Prepared and presented by
• Dr. Ahmad Khasawneh

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FOREX Fundamental Analysis The Economics
Indicators

• Analyzing the data
• Evaluating data changes (over time, compared to
  the market participant forecast, relative to the
  business cycle, compared to previous periods
  average, normal range).
• Assessing whether the data change is significant
  or not.

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FOREX Fundamental Analysis The Economics
Indicators

• U.S. Economics Statistics
• Unemployment is the percentage of the unemployed
  people to the total labor force in the economy.

Market Significance Typical Released Time Period Covered
Very High 0330 PM First Friday of the month Prior Month
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FOREX Fundamental Analysis The Economics
Indicators
- Employment Decrease U.S. Dollar -
Unemployment increase will
depreciate
- Employment Increase U.S. Dollar -
Unemployment Decrease will
appreciate
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FOREX Fundamental Analysis The Economics
Indicators

• Employment tends to grow the fastest during the
  recovery phase of the cycle 260k per month.
• Employment tends to grow 100k faster during the
  rapid growth phase than the slower phase.
• The significant unemployment rate change is about
  0.2pp.

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FOREX Fundamental Analysis The Economics
Indicators

1. Gross Domestic Product (GDP)

Market Significance Typical Released Time Period Covered
Very High (for initial estimate of quarter) 0330 PM About the 20th day of the month Prior Quarter
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FOREX Fundamental Analysis The Economics
Indicators
- GDP Decrease U.S. Dollar will
depreciate - GDP Increase U.S. Dollar
will appreciate

• 0.1pp on a quarter to quarter basis is the
  minimum
• significant Variation.

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FOREX Fundamental Analysis The Economics
Indicators

1. Consumer Price Index (CPI)

Market Significance Typical Released Time Period Covered
High 0330 PM About the 10th day of the month Prior Month
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FOREX Fundamental Analysis The Economics
Indicators
- CPI Decrease U.S. Dollar will
depreciate - CPI Increase U.S. Dollar
will appreciate

• The normal range of the CPI change lies between
• 0.1 - 0.5.

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FOREX Fundamental Analysis The Economics
Indicators

1. Producer Price Index (PPI)

Market Significance Typical Released Time Period Covered
High 0330 PM About the 10th day of the month Prior Month
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FOREX Fundamental Analysis The Economics
Indicators
- PPI Decrease U.S. Dollar will
depreciate - PPI Increase U.S. Dollar
will appreciate

• The normal range of the CPI change lies between
• 0.0 - 0.5.

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FOREX Fundamental Analysis The Economics
Indicators

1. Employment Cost Index (ECI)

Market Significance Typical Released Time Period Covered
Moderate 0330 PM Last Thursday of the 1st month of the new quarter Prior Quarter
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FOREX Fundamental Analysis The Economics
Indicators
- ECI Decrease U.S. Dollar will
appreciate - ECI Increase U.S. Dollar
will depreciate

• The average quarterly increase in the ECI was
• 1.2 and 1.4 in the recession and recovery,
• and 1.1 in the expansion.

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FOREX Fundamental Analysis The Economics
Indicators

1. Average Hourly Earnings

Market Significance Typical Released Time Period Covered
Moderate 0330 PM 1st Friday of the month Prior Quarter
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FOREX Fundamental Analysis The Economics
Indicators
- Hourly Earning Decrease U.S.
Dollar will depreciate - Hourly Earning
Increase U.S. Dollar will appreciate
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FOREX Fundamental Analysis The Economics
Indicators

1. National Association Purchasing Manager (NAPM)

Market Significance Typical Released Time Period Covered
High 0330 PM First day of the month Prior month
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FOREX Fundamental Analysis The Economics
Indicators
- NAPM Decrease U.S. Dollar will
depreciate - NAPM Increase U.S.
Dollar will appreciate

• The diffusion index can range between 0 and 100
  
• percent. With 50 implying no net change
• above 50 suggesting improvement and below
• 50 represent a contraction.

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FOREX Fundamental Analysis The Economics
Indicators

1. Retail Sales

Market Significance Typical Released Time Period Covered
High 0330 PM Mid of the month Prior Quarter
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FOREX Fundamental Analysis The Economics
Indicators
- Retail Sales Decrease U.S.
Dollar will depreciate - Retail Sales
Increase U.S. Dollar will appreciate

• The normal range of retail sales 0.0 - 1.2.
• The normal range of retail sales ex-auto
• 0.1 - 1.0.

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FOREX Fundamental Analysis The Economics
Indicators

1. Home Sales

Market Significance Typical Released Time Period Covered
Moderate 0400 PM Near the end of the month Prior Quarter
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FOREX Fundamental Analysis The Economics
Indicators
- Home Sales Decrease U.S. Dollar
will depreciate - Home Sales Increase
U.S. Dollar will appreciate
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FOREX Fundamental Analysis The Economics
Indicators

1. Car and Truck Sales

Market Significance Typical Released Time Period Covered
Moderate Between the first and third day of the new month Prior Month
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FOREX Fundamental Analysis The Economics
Indicators
- Car Truck Sales Decrease U.S.
Dollar will depreciate - Car Truck Sales
Increase U.S. Dollar will appreciate
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FOREX Fundamental Analysis The Economics
Indicators

1. Consumer Confidence Measures

Market Significance Typical Released Time Period Covered
Moderate 0500 pm last Tuesday of the month Prior Month
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FOREX Fundamental Analysis The Economics
Indicators
- Consumer Confidence Decrease U.S.
Dollar will depreciate - Consumer Confidence
Increase U.S. Dollar will appreciate
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FOREX Fundamental Analysis The Economics
Indicators

1. Personal Income and Consumption

Market Significance Typical Released Time Period Covered
High 0330 PM About the 10th day of the month Prior Month
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FOREX Fundamental Analysis The Economics
Indicators
- Income Consumption Decrease U.S.
Dollar will depreciate - Income
Consumption Increase U.S. Dollar will
appreciate
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FOREX Fundamental Analysis The Economics
Indicators

1. Durable Goods Orders and Shipments

Market Significance Typical Released Time Period Covered
Moderate up to High 0330 PM around the 10th business day of the month Prior Month
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FOREX Fundamental Analysis The Economics
Indicators
- Orders Shipments Decrease U.S.
Dollar will depreciate - Orders Shipments
Increase U.S. Dollar will appreciate
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FOREX Fundamental Analysis The Economics
Indicators

1. International Trade of Goods and Services

Market Significance Typical Released Time Period Covered
Moderate 0330 PM Third week of the month Prior two month
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FOREX Fundamental Analysis The Economics
Indicators
- Trade Balance Deficit Increase
U.S. Dollar will depreciate - Trade Balance
Surplus Increase U.S. Dollar will
appreciate
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FOREX Fundamental Analysis The Economics
Indicators

1. Unemployment Insurance Claim

Market Significance Typical Released Time Period Covered
Moderate 0330 pm Every Thursday Prior Week Ending Saturday
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FOREX Fundamental Analysis The Economics
Indicators
- Jobless Claims Decrease U.S.
Dollar will appreciate - Jobless Claims
Increase U.S. Dollar will depreciate