fundamental-23-27-septamber

Table of Contents

Forex Fundamental Analysis – September 23-27

Purchasing Managers’ Index (PMI)

News Release Date: Monday, 23 September

The Purchasing Managers’ Index (PMI) is a measure that indicates the overall direction of the economy in the manufacturing sector. This index is based on a monthly survey of supply chain managers across 19 industrial sectors, covering the entire production process from start to finish (distribution and delivery).

The figures and changes in the PMI and its components can provide valuable insights for business owners, market analysts, and investors. It is considered a leading indicator of overall economic performance in the United States.

Analysis of the PMI Index and Its Impact on the Dollar and Other Symbols:

A PMI reading above 50 indicates expansion in the sector, while a reading below 50 signifies contraction. A reading higher than expected should be considered positive/bullish for the dollar and bearish for opposing currency pairs and gold. On the other hand, a lower-than-expected reading should be seen as negative/bearish for the dollar and bullish for opposing currency pairs and gold.

The closer the PMI figure is to 100, the better it is for the economy and, consequently, for that country’s currency. Such growth can demonstrate the health of the economy and, in the future, may push the central bank to adopt contractionary policies and raise interest rates.

 

USD 🚩
 
 ➡️Previous CB Consumer Confidence: 109.7
 
➡️Forecasted CB Consumer Confidence: 112.1
 
 Insights:
 A higher CB Consumer Confidence data is generally associated with a stronger USD, while a lower CB Consumer Confidence data is associated with a weaker USD.
                                                                                                                                     
 👉Act.:  pending…

Consumer Confidence Index (CCI)

News Release Day: Tuesday, 24 September

The Consumer Confidence Index (CCI) is a standardized confidence indicator that provides insight into future household consumption and savings trends. This index is based on responses regarding households’ expected financial situation, their sentiments about the general economic outlook, unemployment, and their ability to save.

A reading above 100 indicates increased consumer confidence in the future economic outlook, leading to less inclination toward saving and a higher tendency to spend on major purchases within the next 12 months. Readings below 100 reflect a pessimistic attitude toward future economic developments, likely resulting in a higher tendency to save and reduced consumption.

This index is measured as a range-adjusted indicator, with the long-term average set at 100.

Analysis of the Consumer Confidence Index (CCI) and Its Impact on the Dollar and Other Symbols:

A reading above 102.8 is considered positive/bullish for the dollar, while it is seen as bearish for opposing currency pairs and gold. Conversely, a lower-than-expected reading is considered negative/bearish for the dollar and bullish for opposing currency pairs and gold.

Higher consumer confidence suggests optimism about the economy, which may lead to increased spending and reduced savings. This can support economic growth and potentially strengthen the dollar. In contrast, lower confidence may signal economic concerns, leading to more saving, less spending, and a weaker dollar.

How the CCI (Commodity Channel Index) Indicator Works:
 
– When the CCI moves above +100, it indicates the start of a new and strong upward trend, signaling a buying opportunity. It’s recommended to use trend indicators or other technical analysis methods to confirm the signals provided by the CCI.
 
– When the CCI moves below -100, it signals the beginning of a strong downward trend, indicating a selling opportunity. Positions with a CCI above -100 should be closed. Again, use trend indicators or other technical methods to verify the signals from the CCI.
 
– Look for overbought levels above +100 and oversold levels below -100. These levels can be adjusted depending on the volatility of the security. For more volatile assets, you might use levels like +200 and -200.
 
– Note: The CCI is an unbounded oscillator, meaning there are no fixed upper or lower limits. This makes interpreting overbought and oversold conditions somewhat subjective. Even if the CCI is overbought, the security can continue to rise, and when it’s oversold, it can continue to fall. Therefore, it’s important to use the CCI in combination with additional indicators for more reliable signals.

Gross Domestic Product (GDP)

 News Release Day: Thursday, 26 September

The GDP measures the annual change in the inflation-adjusted value of all goods and services produced by an economy. It is the broadest measure of economic activity and a key indicator of a country’s economic health.
 
GDP is an essential tool for comparing the economic performance of countries and analyzing economic trends over time. It provides valuable insights into economic growth rates, the economic structure, and income sources of nations. Policymakers use GDP data to shape fiscal and monetary policies, set budgets, and allocate resources. Overall, GDP is one of the primary metrics used to gauge a country’s economic development and social well-being.
 
Analysis of GDP and Its Impact on the Dollar and Other Symbols:
 
When quarterly GDP increases consecutively, it indicates economic expansion. Conversely, consecutive declines in GDP signal economic recession. Additionally, an increase in a country’s population typically leads to higher GDP, as overall spending increases, and vice versa.
 
– If the GDP exceeds expectations, it is considered positive/bullish for the dollar and bearish for opposing currency pairs and gold. This suggests that a stronger economy may lead to increased consumer confidence and spending.
 
– If the GDP reading is lower than expected, it is viewed as negative/bearish for the dollar and bullish for opposing currency pairs and gold. This may indicate economic weakness and can lead to reduced consumer spending and lower investment.
 
Overall, GDP is a critical indicator for assessing the health of the economy and its implications for currency strength and market sentiment.
 
USD 🚩 
 
Final GDP q/q
 
▶️Prev.: 3.0%
▶️Fcst.: 2.9%
 
Insights:
Higher Final GDP q/q -> Stronger USD
Lower Final GDP q/q -> Weaker USD                                                                                                                                                                                                                                                               

Unemployment Claims

News Release Day: Thursday, 26 September

Unemployment claims are a vital economic indicator that can significantly impact the forex market. This figure refers to the number of individuals who have applied for unemployment benefits in a given week. The data is released every Thursday by the U.S. Department of Labor and can have a notable effect on the value of the dollar.
 
The number of unemployed individuals provides important signals about the overall health of the economy, as consumer spending is closely tied to labor market conditions. Unemployment is also a key consideration for those guiding the country’s monetary policy, as high unemployment may prompt policymakers to implement measures aimed at stimulating economic growth.
 
In summary, changes in unemployment claims can lead to fluctuations in the dollar and influence market sentiment regarding economic stability.
 
Analysis of Unemployment Claims and Their Impact on the Dollar and Other Symbols
 
The unemployment rate provides important insights into the economic conditions of a country. Financial market analysts pay close attention to this indicator because changes in the unemployment rate can significantly influence a country’s monetary policies and interest rates. The effects of unemployment claims on the forex market are substantial.
 
–If the unemployment rate is announced higher than expected, it is seen as negative/bearish for the dollar and positive/bullish for opposing currency pairs and gold. This reflects economic troubles that could lead to a decrease in the currency’s value in the forex market.
 
–Conversely, if the unemployment rate is lower than expected, it is considered positive/bullish for the dollar and negative/bearish for opposing currency pairs and gold. A lower unemployment rate indicates a healthier economy, which can strengthen the currency.
 
Overall, fluctuations in unemployment claims can lead to significant market movements and shape sentiment regarding economic stability and growth prospects.
 
Unemployment Claims 🚩
 
👉Actual data: 219K
 
 
👉Act.:  pending…

Jerome Powell’s Speech, Chair of the Federal Reserve

Thursday, 26Septemeber

As the chair of the Federal Reserve, who controls short-term interest rates, Jerome Powell has a significant impact on the value of the dollar. Traders closely analyze his public interactions, often seeking subtle clues about future monetary policy. His speeches can lead to considerable volatility as traders attempt to decode hints regarding interest rates.
 
According to a Reuters survey of economists, 86 out of 107 expect the Federal Reserve to reduce interest rates by 0.25% in both the November and December meetings, bringing the Fed’s rate range to 4.25% to 4.5% by the end of the year. Additionally, it’s anticipated that the Federal Reserve will lower interest rates to 3.25% to 3.50% by the end of 2025.
 
– If Powell’s speech is more aggressive than expected, it could strengthen the dollar and weaken opposing currency pairs and gold. Traders will be particularly attuned to any signals regarding future interest rate changes, which could impact market sentiment significantly.

Core Personal Consumption Expenditures (PCE)

News Release Day: Friday, 27 September

The Core PCE measures changes in the prices of goods and services purchased by consumers for consumption, excluding food and energy. Prices are weighted based on the total expenditure for each item, providing a consumer-centric view of price changes. This indicator is crucial for assessing shifts in purchasing trends and inflation.
 
The key difference between Core PCE and the Core Consumer Price Index (CPI) is that Core PCE focuses exclusively on goods and services that consumers target and purchase. By weighing prices according to total expenditure, it offers important insights into consumer spending behavior.
 
While the CPI is typically released about 10 days earlier and garners more attention, the Core PCE is a critical measure for understanding inflation trends and economic health, making it a significant indicator for policymakers and economists.
 
Analysis of Core Personal Consumption Expenditures (PCE) and Its Impact on the Dollar and Other Symbols
 
The Core PCE is the Federal Reserve’s primary inflation measure. Inflation is crucial for valuing the dollar, as rising prices may lead the central bank to increase interest rates to control inflation.
 
– If the PCE reading is higher than expected, it is considered positive/bullish for the dollar and bearish for opposing currency pairs and gold. This suggests that stronger inflation may prompt the Federal Reserve to adopt a more aggressive stance on interest rates.
 
– Conversely, if the PCE reading is lower than expected, it is viewed as negative/bearish for the dollar and bullish for opposing currency pairs and gold. Lower inflation may imply that the Federal Reserve could maintain or even lower interest rates, which could weaken the dollar.
 
Overall, the Core PCE plays a significant role in shaping market expectations regarding monetary policy, making it a key indicator for traders and investors.
 
USD 🚩
Core PCE Price Index m/m
 
Prev.: 0.2%
Fcst.: 0.2%
 
👉Act.: pending…

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