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28 December 2020,08:08

Analysis

Economic Release

28 December 2020, 08:08

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Every given period of time, each country around the world will have what is called an economic release. A data release is the periodic publication of economic data and or news of a qualitative and quantitative nature.

These data or news releases help paint a picture of the overall health of a company or country’s economy.  A stronger outlook for a company or country’s economy should be reflected by a higher company stock price or stronger domestic currency.

This data/news can have both a short and long term impact on prices and traders will look to benefit from any movement created by these economic data releases. So investors will make investment decisions based on their interpretation of the economic data which has been released.

Key Points of Economic Data

  • The key to trading data is to look at the outcome of the data/news release in relation to the expected forecast.
  • The larger the difference between the actual figure and the forecast figure, the greater the likely hood of a larger change in prices.
  • The strength of importance of the data will also be a factor in determining strength of price moves.

An example of an economic data release is as follows;

U.S. Non-Farm Payrolls – [Released monthly] Measures the number of jobs created or lost each month excluding the agricultural sector.

For the month of July we can see that… – –
The forecasted figure is = -65k
The prior figure is = -125k
The actual figure is = -131k
And finally the revised figure is = -221k

We can see here that the actual figure is more than two times the forecasted figure – and as we mentioned before the bigger the difference the more likely the fluctuation.

In this case, higher than expected unemployment rates is bad news, so there was an initial sell off on the Dollar.

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