how to interpret "Forecast"

In the forecast section on the forex calendar here on this site; if it says USD forecast -0.6% or something - how should I interpret this, that the USD is forecasted to weaken or to strengthen?

So EUR/USD, according to forecast, should rise if forecast < 0?

The forecast relates to a number for a specific piece of economic data. Take the US trade balance today for example. According to the site, the previous number was -58.9B. The forecast number is -60.0B. That means, analysts polled, are forecasting/predicting the trade balance to weaken slightly.

What you are looking for is the actual number at 1.30GMT. If it is widely different there may be a profitable trading opportunity. Generally, a higher trade balance is negative for the dollar. So you would look for a number higher than 60.0B to take a short dollar position.

Always pay atttention to what the market is doing though and not what you think it should do.

This may assist.

USD Trade Balance came out at -58.2 and the forecast here was -60.0B. $1.8 Billion better than anticipated which is good for the greenback. A drop of 20 pips on EURUSD - I predicted a drop of 30 pips here. At least I was in the right direction. But don't follow me - I haven't a clue!

The follow through actually gave us a 30 pip drop over the following hour.

Go to this site to get some in-depth analysis of the news. There are many other sites that will do the same.

http://fidweek.econoday.com/calendar...ily/index.html

One of the mistakes inexperienced traders make is believing that there is a logical and linear cause and effect between the news and the price action. Many times an announcement will come out with numbers that should make a currency strengthen, yet it will weaken. Forums are then flooded with messages proclaiming everything from the market is illogical to "my broker screwed me again". The fact is that the numbers have no value whatsoever.

The value lies in the perception of the traders, not in the numbers. Here's a simple example, which by the way is repeated over and over again. NFP is projected at 110k. The whisper number is 140-150k. Expectations are running high for a strong number in order to sustain dollar bullishness. The number comes out at 115k and the dollar goes down. On the face of it, the news was good. But the reality is that it is expectations and thoughts of the future that drive traders. This happens all the time.

What you need to learn to do is how to gauge the sentiment of the players. Not an easy thing at first, but with lots of diligent studying, you can do it. I suggest you keep a log dedicated to the news. You'll be surprised at what you'll learn. Read the analyst's tripe and see what they're selling. Go to forums and see what they're expecting and how they're positioned. Then write down the possible scenarios...number is on target or number is high or number is low...then what happens in each scenario. It's a complex approach, but it's vastly superior than taking a linear approach to the news.

Nat

You ain't so Dopey. Nicely summarised.

Yeah, I'm not good with these numbers and facts at all; I'm a total techie...

I guess what I thought was that the number (negative or positive) predicted the actual direction of the dollar index.

How stupid of me. I liquidated what would've been a profitable trade because I hate trading during news times.. haha

At least now I sort of know what these numbers are...

Sir, most welcome.