Fundamental/News Thread

As I prepare for 2018, I need to understand what happened in 2017?

Question # 1: Are we in the beginning of a multi-year bear USD market?

The state of US economy is strong: 1) 4 hikes in the last 13 months (including the expected hike this week); 2) projections for 3 hikes in 2018; 3) GDP above 3% for Q2 and Q3; 4) Full employment; and, 5) The stock markets are at record highs, and corporations have record profits.

Yet, the dollar has lost ground to all the major currencies in 2017:

EURUSD is up 1800 pips
GBPUSD is up 750 pips
USDCAD is down 600 pips
USDJPY is down 350 pips
AUDUSD is up 350 pips
NZDUSD is up 250 pips
‎USDCHF is down 250 pips

With the hike this week, the FED will have hiked more than the other central banks combined in the last 13 months: 4 vs. 3 (2 for BoC, 1 for BoE).

I know US inflation is low, but inflation is low everywhere except for the UK.

In regards to the UK, the UK can't be in a better fundamental place the the US: 1) The BoE hiked once, and said they were done; 2) They lowered growth projections; 3) Lowered hike projections to only 2 hikes in the next 3 years; 4) Prime May called for early elections and lost political power; and 5) Very little progress had been made on Brexit negotiations until last week.

But, the pound gained 750 pips this year on the dollar.

Here is what Marc Chandler had to say about the recovery in EURUSD this year: "In the larger perspective, we think this year's euro recovery is best understood as a correction to the decline since mid-2014. The 50% retracement of the euro's losses since mid-2014 is found slightly higher near $1.2165."

Question #2: What are the reasons that the dollar is weak?

Here are some possible answers:

a) Risk Aversion--The tensions with North Korea has moved the market temporarily. One of the great trades for 2017 was fading USDJPY North Korea moves.

b) The lack of a tax deal--I understand this is related to sentiment, but I don't think it explains the run up in EU and GU this year.

c) Is the dollar inversely correlated with the stock market right now? I have no idea. I am going to have to look at this. Is this a historical connection?

d) Is this a product of the unwinding of QE? I don't think so because the moves in EU and GU started before the unwinding in October. However, this seems like something that needs exploring: What is the impact of QE unwinding on the dollar?

e) Is this a Reminiscences of a Stock Operator trade? One of the most valuable insights is that "In a bull market bears factors are ignored. That is human nature, and yet human beings process astonishment at it." Are the bull factors being ignored because we are in a bear market?

Back to the original question: Are we in the beginning of a multi-year bear USD market?

The fundamentals of the US dollar suggests that 2017 should have been a strong year for the dollar, but it was not.

What am I missing. I would love to get some feedback on this. I am a bit baffled.

I always try to think like an institutional investor.

For the dollar this year has all been about Trump.
When he took office the dollar soared for few months
Then towards the start of the year the dollar dived off all because of Trump. Also stockmarket valuations in the US were at an all time high. Trump also warned the market about having a high dollar.

Investors started to look for returns elsewhere
The Euro was coming from a low position
We started to see some decent figures coming through. It was basically on life support.

Really we need to see a change in sentiment from investors. I do have hopes for this tax deal in respect of investor flows

We have to be careful of forming a bias rather than following investor sentiment

At the moment
Aussie has issues.
NZD election issues although new govenor is promising
Pound waiting for Brexit deal. Could be positive once it comes through
CAD doing well. Also riding on the coat tails of oil

Is this the start of a multi bear USD- going to have to think about that

This is an incredibly important reminder for me. I need to look at this everyday. Forming biases might be my worst weakness.

I vaguely remember Trump's warning. It happened just as I was getting back into the markets. I definitely didn't understand the implications of those words at the time.
Your analysis really pulled it together. It has been quite a choppy year for USD pairs except in EU.

I need to make this my daily practice. So much of sentiment analysis is understanding when the institutional traders are deciding to shift the direction of the market.

If I recall the move on the Euro really started when Macron won the French election
This was seen to be positive for the single currency.

[quote= So much of sentiment analysis is understanding when the institutional traders are deciding to shift the direction of the market.[/quote]

Here goes;

Elections- trading into and out of (compare the French election against the New Zealand one)
Significant fiscal stimulus (Canada recently)- and soon the US
Major "new" geopolitical speeches (Brexit - Barnier etc...)
New different forecasts from Central banks- these are great
Changes in interest rate bias (with sentiment)

You could just wait for these events

Good day all
I am a newbie
I want to know the meaning of the various colour codes used for the economic news and their impact on the market

I mean what does red colour and yellow colour means

Hello Chimchris247 Refer to the images for the answer you seek

Hello, I just joined this thread newly. I am interested in how economic news release move the market (especially the big moves). However I struggle with direction and volume.

I am wondering what the expectation for the USD be tonight and the currency pairs to trade when the news hit the market.

If I may, what is your experience level in trading the fundamentals? How much stuff do you know about fundamental analysis? The basic stuff?
In any case, I encourage you to read this thread right from the first post on page 1 thru to this page. I 100% guarantee it will guide you to the answers you seek.

And while you are at it, follow every upcoming major news event closely. Before the event, google search articles about it (this forum is 90% about doing research in my opinion). AND TRY TO TAKE NOTE OF HOW IT MOVED THE MARKET after the event.

As for the USD tonight,

The expectation is for the Fed to hike rates by 25 basis points (USD neutral).
They could show confidence in the economy by significantly upgrading their economic projections -most especially for inflation (USD positive) and/or signaling plan to hike rates four or more times in 2018 (super USD positive).

In the above scenario we could look to buy USD against most of the other currencies (best against the weakest of them all) for the next 1 or 2 sessions at least. Your entry style depends on you.

In a totally opposite scenario, we could look to sell USD.

You should go through this article if you get the time.. http://www.forexlive.com/news/!/all-...d-one-20171213

I am curious, where do the forecasts come from and when do they get announced? I am curious to know if the announcement of the forecasts can be a catalyst event that can be traded and then when the actual data is released and it is different than the forecast, we can trade it again.

Thank you so much for your kind response to my post. I have been following fundamentals for about 6 months, I only know about a few of the economic information that moves the market. I will take your advice and do more research.

However, one trend that I have noticed is that, the same news release doesn't always move the market with the same volume. For example, the NFP news release on Aug 4 had more volume than the NFP news release on Dec 8. One question I am still trying to figure out is, apart from determining direction of the move from released data, how does a trader determine the volume? For me I think the volume is important in setting profit targets.

I will continue to do more research like you advised and make good use of the content available on this thread, Thanks a lot.

This is how I traded the USD CPI news on USDCAD

SellStop @ 1.28489
TP @ 1.28448

In an attempt to thread carefully, I traded with a lot size of 0.01 and I kept my pip target small because I wasn't sure about the volume of the move. I plan to keep my pip target small and increasing my lot size for more profit in the future.

I want to ask all, I've read the tread from the first page, there are using meta trader and there are using ctrader, which platform is better? especially for trading news, and does anyone win using this method for longterm, txs

For trading the news or economic releases?
I presume that you are referring to the latter
ctrader/mt4- makes no difference to me - I just prefer the interface of ctrader
Can you make money - yes otherwise I would not be here
You need to trade in to and out of economic releases

Yes, i mean that, before or after release, and what platform do you recommend for faster execution, txs

Hi - they are pretty much the same.
you can have one click trading on both platforms
If you are going to try to get in the millisecond after a release you could look at trading guns

How do you deal with a massive spread from your broker during periods of high volatility?
*see image*

I don't trade this way- but you could try a fixed spreads account
But even these may vary- sometimes they will have a day spread, night spread and a spread for releases.
Rather than trading the event -you could look at trading into it
Canadian CPI figures are due this Thursday.
If the forecasts are high - then I would expect to see some bullish sentiment leading into the release
Although Xmas is next week and I would expect volatility to be a bit lower
To be honest I am not expecting much- but lets see what the forecasts say.

Alternatively, if there is a large beat or miss against expected- you could get in on the first pullback