NFP: Trade the Momentum and not the Moment
Trading the moment of the NFP relaese is hit and miss, trading the momentum of the NFP is a better bet.
The volatility of the 1st Friday of each month that NFP is released is not just down to the number of jobs created, this is a complex release that has four components that Traders must be aware of:
1. The actual number of jobs reported as being created this month; July’s number is expected in at 125k, and is an average of analysts’ figures that range from 300k to 20k. The High to Low difference in opinion is enormous.
2. The revision to the previous month’s number; Probably as important as the new number, the revision can add 50k to the previous amount, and that is what creates the volatility as Traders re-align their previous thoughts on what happened four weeks ago.
3. The Employment Rate; Currently at 4.5% is one of the lowest in the world and has stayed between 4.5-4.6% recently. Any move outside this area would be dramatic
4. Average Hourly Earnings; Looking at coming in around 0.4%, this is the number that the Fed stated was causing it concern as an inflationary read.
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Guide to Implementing Carry Trades
The main economic law of supply and demand is that markets that offer the highest return to investment will attract more investors and capital. These markets are those where the nations offer the highest rates and in this way they will create the most demand for their currencies.
U.S. Import Price Index
An import price index measures changes in the prices of imports of merchandise into a country. The index numbers for each reference period relate to prices of imports landed into the country during the period.
The United States Import Price Index is published by the United States Department of Labor’s Bureau of Labor Statistics. It is part of the Office of Prices and Living Conditions. It began as an annual publication, publishing its first index in 1973. It began publishing on a quarterly basis in 1974. A major program milestone occurred in 1982 when the Office of Management and Budget placed the IPP indexes on its list of Principal Federal Economic Indicators together with the Consumer Price Index and Producer Price Index. In January 1993, the IPP began the monthly publication of merchandise indexes. The IPP is constantly expanding in its mission to measure the import and export of goods and services to the U.S.
The IPP publishes indexes on merchandize categories and selected categories of services. Currently, the IPP published monthly air passenger, air freight, ocean liner, and ocean tanker service indexes.
The IPP publishes its merchandize indexes following the Harmonized Classification System, the SITC classification system, and the Bureau of Economic Analysis (or END USE) classification system. The IPP will begin publishing based on the North American Industrial Classification System system in the January 2006 news release.
In January 2005, the IPP expanded its Locality of Origin indexes adding a break-out for China. Starting with the January 2006 news release, the IPP will begin publishing import and export indexes based on the NAICS.
One of the primary customers of the IPP is the Bureau of Economic Analysis. They use the Import and Export price indices to deflate GDP. The IPP is currently headed by William Alterman.
From Wikipedia, the free encyclopedia
Bank of Canada keeps key interest rate unchanged at 4.25 pct
OTTAWA (AFX) - The Bank of Canada has kept its main interest rate unchanged at 4.25 pct, after a series of monthly rises.
The bank said its outlook for economic growth and inflation in Canada has not changed, despite “a little stronger” than expected growth in the first half of the year and a dollar trading “somewhat higher” than expected.
There was a further shift in demand from exports to domestic consumption while the economy continues to operate “just above its production capacity,” the bank said.
But, inflation has remained above its 2 pct target, due to higher energy prices, the bank said.
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Markets still weighed down by uncertainty
Market OutlookOnce again the market is largely being driven by the degree of global risk rather than anything specific on interest rates. Despite the slightly softer interest rate background developing in the US, the US equity market remains a nervous place, with concern about earnings the latest source of uncertainty. This in turn is weighing on global risk appetites and helping to check both the recent recovery in some emerging currencies as well as existing positioning on the majors. Part of this yesterday, at least initially, was a JPY story, with position cutting on the JPY weighing on the EUR in general. As far as the JPY is concerned, there may be more of this to come ahead of Friday’s policy decision, but it is unlikely to be sustained. There is a risk the BoJ does not hike rates at all or opts for a smaller than expected rise and even if they hike by 25bp, this is likely to be accompanied by a dovish message to head off any negative fallout for markets and/or criticism from the government.
Forex
Money. We all need it. We all want it. Trillions and trillions of dollars, pesos, euros, pounds, levs, francs, and more change hands every day for goods and services around the world. Most of us are only familiar with the money that is exchanged for goods and services in our own country and are only concerned with getting more of that.
But there is a lot more to money than that. What is the relationship between the currency in your country and the currency of some other country and why should it matter to me? I’m glad you asked. In this article we will explore some of the currencies around the world and answer some questions you may not even know you had.
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A New Wall Street Line Dance: Performance
Too much investor time and analytical effort is wasted trying to predict course corrections… even more is squandered comparing portfolio Market Values with a handful of unrelated indices and averages. If we reconcile in our minds that we can’t predict the future (or change the past), we can move through the uncertainty more productively. Let’s simplify portfolio performance evaluation by using information that we don’t have to speculate about, and which is related to our own personal investment programs.
Day Trading Education … How to pick HOT STOCKS in 2006 … Learn Day Trading
Most of them will seem promising, but the truth is that a good number of these trading & investing opportunities are extremely risky, while others are not as good as they seem. That’s why it’s very important to know how to choose the best especially if you want to day trade them.
When you know how to pick and approach the best hot stock trading opportuntites, you are able to generate a consistent and respectable amount of money in a very short period of time.
Experienced day traders recognize that trading hot stocks on momentum can be the fastest way to make money in the stock market.