The ISM Report for January 3, 2007 | Forex Factory

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Attachments: The ISM Report for January 3, 2007
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The ISM Report for January 3, 2007

  • #1
  • First Post: Jan 1, 2007 3:06pm Jan 1, 2007 3:06pm
I have done just a small bit of work on some of the most recent ISM reports that have come out.

On Wednesday (one day delayed) we’ll get the latest ISM report. It can be a very influential report in the few days after it is released.

Here are the last two years of ISM Index results (in chart form, see below for the attachment). I am sure that you notice that the trend is down – the last reading was 49.50 and that showed that manufacturing activity is slowing down. Remember, if manufacturing activity is slowing, that means the economy as a whole is slowing, and that makes if far less likely that the US Fed is going to raise rates again, and more likely that the Fed will lower rates sometime in the next 6 months.

Here are some of the recent numbers. I expect a number at or below 49.5.

November 200649.5
October 200654.5
September 200651.2
August 200654.5
July 200654.7

The trend in manufacturing is clearly down, and that's the most important thing to remember. Of course this doesn't mean we can't get a surprise to the upside on the number.

Here are my forecasts as for currency movement post-ISM (and by this I don't mean 5 minutes after the report is released).

If the number is below 49.00, I expect the GBPUSD to rise at least 150 pips within 48 hours. If the number is above 52.00, I expect the GBPUSD to fall at least 150 pips (and probably more) within 48 hours. If the number is between 49.50 and 52.00, then the GBPUSD might bounce around until Friday’s employment report.
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  • #2
  • Jan 1, 2007 3:25pm Jan 1, 2007 3:25pm
Welcome to the data traders party Rob.
Profit is where readiness meets Opportunity
  • #3
  • Jan 1, 2007 4:10pm Jan 1, 2007 4:10pm
Quoting FXopportunist
Welcome to the data traders party Rob.
Thanks for the welcome! I love parties. And it should be a great one this week. I am excited for the NFP as well, and what it might do to the majors over the next 30 days.
  • #4
  • Jan 1, 2007 4:11pm Jan 1, 2007 4:11pm
hey

do guys know where i can collect history data from fundamental releases..


revoke
  • #5
  • Jan 1, 2007 4:30pm Jan 1, 2007 4:30pm
Quoting revoke
hey

do guys know where i can collect history data from fundamental releases..


revoke
Both Maxey and BK have contributed volumes of historical info on data releases. If you search out their posts you will find it.
Profit is where readiness meets Opportunity
  • #6
  • Jan 1, 2007 5:02pm Jan 1, 2007 5:02pm
Hey Rob
Obviously this also means the eruo will shadow the gbp. Additionally the yen and swissy will mirror the the euro and gbp. Sound right?




Quoting robbooker
I have done just a small bit of work on some of the most recent ISM reports that have come out.

On Wednesday (one day delayed) we’ll get the latest ISM report. It can be a very influential report in the few days after it is released.

Here are the last two years of ISM Index results (in chart form, see below for the attachment). I am sure that you notice that the trend is down – the last reading was 49.50 and that showed that manufacturing activity is slowing down. Remember, if manufacturing activity is slowing, that means the economy as a whole is slowing, and that makes if far less likely that the US Fed is going to raise rates again, and more likely that the Fed will lower rates sometime in the next 6 months.

Here are some of the recent numbers. I expect a number at or below 49.5.

November 2006 49.5
October 2006 54.5
September 2006 51.2
August 2006 54.5
July 2006 54.7

The trend in manufacturing is clearly down, and that's the most important thing to remember. Of course this doesn't mean we can't get a surprise to the upside on the number.

Here are my forecasts as for currency movement post-ISM (and by this I don't mean 5 minutes after the report is released).

If the number is below 49.00, I expect the GBPUSD to rise at least 150 pips within 48 hours. If the number is above 52.00, I expect the GBPUSD to fall at least 150 pips (and probably more) within 48 hours. If the number is between 49.50 and 52.00, then the GBPUSD might bounce around until Friday’s employment report.
  • #7
  • Jan 1, 2007 9:04pm Jan 1, 2007 9:04pm
Quoting revoke
hey

do guys know where i can collect history data from fundamental releases..


revoke
I think there have been some posts mentioned here already, but here's another place to get the data:

http://biz.yahoo.com/c/e.html

You can click "Last Week" to go to the previous week, and once you do that you can also adjust the date directly in the URL. It goes about 5 years back.
  • #8
  • Edited 9:44am Jan 2, 2007 8:39am | Edited 9:44am
Quoting revoke
hey

do guys know where i can collect history data from fundamental releases..


revoke
I am currently demoing Forex News Trader Pro software and it is very good but costs $199. You can get some good information off of the demo here

{link removed See rule #2}
  • #9
  • Jan 2, 2007 12:12pm Jan 2, 2007 12:12pm
Hi. I've been thinking about what you said about a 150pip movement in 48 hours.
I've been thinking of these plays a little short term lately, first few candles, fibo's, etc. But I hadn't thought of playing these releases in a larger trend.
If we get a number that's drastic enough to create such a trend, how would one play this trend? Obviously randomly placing and order and forgetting wouldn't be the best way to do it. But a big movement just after a release may mess up any indicators that one may normally be following.
  • #10
  • Jan 2, 2007 12:26pm Jan 2, 2007 12:26pm
Quoting techno79
Hi. I've been thinking about what you said about a 150pip movement in 48 hours.
I've been thinking of these plays a little short term lately, first few candles, fibo's, etc. But I hadn't thought of playing these releases in a larger trend.
If we get a number that's drastic enough to create such a trend, how would one play this trend? Obviously randomly placing and order and forgetting wouldn't be the best way to do it. But a big movement just after a release may mess up any indicators that one may normally be following.
One way that I have been testing to play the larger trend is to buy above the most recent highs (in the case of the GBPUSD that might end up being 9760 or so by tomorrow morning, if it stops its move upward today so far) or below the recent lows, take a sell (in this case below 9700 perhaps on the GBPUSD), and then hold on for the larger move.

There are many people who trade in the short term on the news, and this can work -- I am sure there are some good posts in the forum about this. I have done it in the past too, but I am working on longer term trading strategies so that there is less emotion, less broker problems, and perhaps bigger gains. I have posted some info about the NFP research I did, and I am going to do more of the same for other reports and stuff.
  • #11
  • Jan 2, 2007 12:34pm Jan 2, 2007 12:34pm
I see what you're doing now. Similiar to a break-out strategy by waiting to bust through the lines. Very simple.
Now I wish I had been logging news events for longer than 4 15minute candles. At least I only started keeping a book since the 20th!
Thanks.
  • #12
  • Jan 3, 2007 9:19am Jan 3, 2007 9:19am
Suprised to not see some dialogue on this trade today.
Profit is where readiness meets Opportunity
  • #13
  • Jan 3, 2007 9:34am Jan 3, 2007 9:34am
surprised to see the pound move this much. Anyone using this as a buying area to go long?
  • #14
  • Jan 3, 2007 9:52am Jan 3, 2007 9:52am
Quoting FrankTheTank
surprised to see the pound move this much. Anyone using this as a buying area to go long?
The ISM index came out at 51.4, which you already know by now. That was better than expected and it sent the USD higher across the board. The GBPUSD took a really good fall!

I think the ISM is generally overlooked as an influential report, but today's number certainly showed that it can move things.

I still believe that the GBPUSD will bounce around -- meaning that it took a big fall this morning, but that it can rebound a bit and is not necessarily going to start a big downtrend or anything. The number would have had to be above 52.00 for me to believe that we're going to see an even bigger drop in the GBPUSD. I could be wrong about this, of course, but that's my strongly held belief.

There was also a question about whether the EUR and the CHF mirror these moves. While it's possible, it's important to remember that the EUR is a much more heavily traded currency and that it does not move as far, generally, as the GBPUSD and the USDCHF. And it doesn't ALWAYS move in the same direction right away. The pairs are correlated, but that does not mean they have to be super correlated in the short term. They can diverge and do weird things in the short term, but then come back in the longer term.
  • #15
  • Jan 3, 2007 9:59am Jan 3, 2007 9:59am
I do not think I would be a buyer until price climbed above the 1.9630 level.
and even then I would be looking for a small profit, maybe about 50 pips at most.
There has been so much resistance to climb much higher, It would be nice to have a solid move up, to become interested in a large upward trend continuing. I think we are in for more chop to downward action for a bit more to come. I sure enjoyed the ride this morning.

Quoting FrankTheTank
surprised to see the pound move this much. Anyone using this as a buying area to go long?
  • #16
  • Jan 3, 2007 10:02am Jan 3, 2007 10:02am
There was a ton of anticipation trading leading into this data. I seems to me that people were buying dollars based on the PMI as a leading indicator for the ISM.

These two data peices may be historically underated, but they have been moving the market hard the last two months.
Profit is where readiness meets Opportunity
  • #17
  • Jan 3, 2007 10:14am Jan 3, 2007 10:14am
What a great trade.

I used two brokers. Went short in the euro and nabbed +27 pips with one broker and +27 with two lots on my other broker.

Nice steady move, and yet not big enough of a difference in numbers to warrant staying in for the long term.

DC
"There is MORE Happiness in giving than receiving"
  • #18
  • Jan 3, 2007 10:50am Jan 3, 2007 10:50am
Quoting robbooker
If the number is below 49.00, I expect the GBPUSD to rise at least 150 pips within 48 hours. If the number is above 52.00, I expect the GBPUSD to fall at least 150 pips (and probably more) within 48 hours. If the number is between 49.50 and 52.00, then the GBPUSD might bounce around until Friday’s employment report.
Well you did say it could go up, down, or stay the same. Good call on this one.
  • #19
  • Jan 3, 2007 11:34am Jan 3, 2007 11:34am
Isn't there a difference between simply saying it could go up, down or stay the same, and saying it will do one of the three depending on some specific ISM results?

Or perhaps you were looking for a prediction of the actual ISM number rather than the behaviour of the market based on the number?
Quoting philmcgrew
Well you did say it could go up, down, or stay the same. Good call on this one.
  • #20
  • Jan 3, 2007 12:00pm Jan 3, 2007 12:00pm
Manage to get a small pips +15 from ISM report.. trade it for just 5 mins.
Good luck everyone
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