It is very likely that the difference between success and failure in Forex/CFD trading depends primarily on which assets you choose to trade each week and in which direction, and not on the exact methods you might use to determine trade entries and exits.
Therefore, at the beginning of the week, it is a good idea to look at the big picture of what is developing in the market as a whole and how such developments are influenced by macro fundamentals, technical factors and market sentiment.
Fundamental analysis and market sentiment
Recent weeks have seen a deterioration in risk appetite, leading equity markets lower and the US dollar higher, but a more complex picture has emerged in recent days despite high yields and volatility in bond markets. The US dollar gave back gains made earlier in the week, while stocks rose. The biggest story of the week is the resilience of the stock markets and we have seen a very important support level in the NASDAQ 100 index continue to hold despite the pressure.
Last week was rather weak in terms of major data releases, with the main event being US non-farm payrolls and average earnings data, which showed that nearly double the number of new jobs had been created jobs compared to the expected amount, that average earnings increased only 0.2% compared to the expected 0.3%, and that the unemployment rate rose slightly to 3.8%. The data suggests a slightly cooler-than-expected US economy, which could support the current mild rally in stocks.
The JOLTS job openings data in the United States was higher than expected, which correctly indicated strong NFP numbers. The other major events in the Forex market were the meetings of the Reserve Bank of Australia and the Reserve Bank of New Zealand, both of which kept interest rates at pre-existing levels, as widely expected.
Other key data released last week were:
- Swiss CPI (inflation): This was lower than expected, showing a month-over-month decline of 0.1% when no monthly change was expected.
- US ISM Services PMI: Turned out as expected.
- US ISM Manufacturing PMI: Slightly better than expected.
- Canadian Unemployment Rate and Employment Change – Just as was the case in the United States, significantly more new jobs were created in Canada last month, resulting in an unexpected drop in Canada's unemployment rate.
There were no big surprises.
The week ahead: October 9 – 13
Next week in the markets will likely see a higher level of volatility than last week as there will be the release of very important US CPI (inflation) data. The key data released this week are, in order of importance:
- US CPI (inflation)
- US FOMC meeting minutes
- US PPI
- UK GDP
- Preliminary UoM consumer sentiment in the US
- Unemployment claims in the United States
- Chinese CPI (inflation)
It's a public holiday this Monday in the United States, Japan and Canada.
Credit by DailyForex.com
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