Philly Fed: State Coincident Indexes increased in 36 states in May

Philly Fed: State Coincident Indexes increased in 36 states in May

by Bill McBride on 6/21/2017 03:55:00 PM

From the Philly Fed:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for May 2017. Over the past three months, the indexes increased in 44 states, decreased in five, and remained stable in one, for a three-month diffusion index of 78. In the past month, the indexes increased in 36 states, decreased in seven, and remained stable in seven, for a one-month diffusion index of 58.

Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Philly Fed Number of States with Increasing ActivityClick on graph for larger image.

This is a graph is of the number of states with one month increasing activity according to the Philly Fed. This graph includes states with minor increases (the Philly Fed lists as unchanged).

In May, 43 states had increasing activity (including minor increases).

The downturn in 2015 and 2016, in the number of states increasing, was mostly related to the decline in oil prices.   The reason for the recent decrease in the number of states with increasing activity is unclear – and might be revised away.

Philly Fed State Conincident Map Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession, and almost all green now.

Source: Philly Fed. Note: For complaints about red / green issues, please contact the Philly Fed.

Rising Investor Caution

Rising Investor Caution

Rising Investor Caution

June 21, 2017

With a low of $43.33 per barrel, West Texas Intermediate oil has fallen 20.4% from its February 23 closing high of $54.45.

The sliding energy sector weighed especially had on Australian equities, which fell 1.6% today. Stocks also dropped 0.9% in Singapore, 0.8% in New Zealand, and 0.5% in Japan and South Korea. And in European trading so far, equities have lost 0.8% in France, 0.9% in Greece, 0.6% in Switzerland, Spain and Germany and 0.5% in Great Britain.

The dollar relinquished most of Tuesday’s rise against sterling, dropping 0.5% against the currency and is also down 0.3% relative to the kiwi, and 0.1% versus the yen, euro and Swiss franc. The dollar is unchanged against the peso and yuan and has risen 0.2% against the loonie and Aussie dollar.

Gold firmed 0.3% to $1,247.40 per ounce.

Ten-year British gilt and Japanese JGB yields are up by two and one basis points, while their German counterpart slid a basis point.

Remarks by Fed officials in recent days have underscored an intent to disregard softer price and growth data while moving forward resolutely with policy normalization through a rising interest rate and reductions to its balance sheet that are likely to commence in the second half of this year.

The Fed stance contrasts with thinking at the Bank of Japan. Minutes released today from the BOJ Board meeting of April 26-27 seem meant to squelch speculation that officials there will pull back from their ultra-stimulative stance anytime soon. While the BOJ has been observed lately to be buying JGBs in less quantity than the target of 80 trillion yen per year and in spite of the BOJ’s upward assessment of economic prospects, risk to growth is still perceived to the downside and the minutes strongly defend current policy settings. A speech today by Governor Kuroda also defended the status quo.

Japan’s all-industry index shot up 2.1% in April, most in a year. This monthly supply-side proxy for GDP had dipped 0.1% in the first quarter, but April saw construction leap by 7.3%, industrial production go up 4.0%, and service sector activity rise 1.2% on month. The all-industry index, which posted small back-to-back increases of 0.5% in 2015 and 2016, was 1.9% higher in April than a year earlier.

In other Japanese economic news, supermarket sales in May were 1.8% below the year-earlier level, but machine tool orders that month posted a 24.5% on-year advance.

Dutch consumer confidence in June was unchanged from May’s reading. Belgian consumer sentiment fell 2 points to a 4-month low. Swedish consumer confidence also declined, but the overall economic tendency index in Sweden rose 0.4 points to a higher-than-forecast 112.1 score in June.

The French government projects 2017 economic growth of 1.6% but core inflation this year of only 0.8%.

Swiss on-year M3 money growth accelerated to 4.1% in May from 3.2% in April.

British monthly public sector borrowing data in May were close to market expectations. Debt that month equaled 86.5% of GDP.

Consumer prices in the year to May rose 3.9% in Malaysia and 5.4% in South Africa.

Uber CEO Kalanick has resigned. U.S. existing home sales data will be reported later today, and several Fed officials are scheduled to speak publicly.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: Japanese all industry idex, Kalanick




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Oil Producers Finally Get the Memo on Prices Staying Lower for Longer—Energy Journal

Oil Producers Finally Get the Memo on Prices Staying Lower for Longer—Energy Journal

Here’s your morning jolt of news, insight and analysis on the global energy business. Send us tips, suggestions and complaints:EnergyJournal@wsj.com.   Sign up for this newsletter: http://on.wsj.com/EnergyJournalSignup   THREE YEARS ON OIL INDUSTRY COMES TO TERMS WITH CHEAP CRUDE The oil industry has finally gotten the message that crude prices may stay lower for longer, reports […]

NFP Trading in Forex and a strategy for trading

NFP Trading in Forex and a strategy for trading

Hello Forex Traders!

The NFP is around the corner again! This is always an exciting event in my opinion, even though I never was (nor will be) a news event trader. To me, the NFP event is something similar to a holiday feeling because of the anticipation of exciting times ahead. Do you have the same?

Price almost always responds in a spectacular fashion to the release of the figures and you can sense the drama in the air. Emotions are flying around as the currency pairs spike up and down. Some traders are winning a fortune, others are losing their shirt. This type of price movement is not for the faint-hearted and causes tremendous turmoil. In some cases, price resembles closely the movement of a roller coaster as it whirls down and up in a matter of minutes or even within a blink of an eye. Yet at the end of the day, the only thing which remains is a daily candle. All the emotions and movement still translate into a daily candle, just as the one before and after NFP.

NFP surely is a separate type of trading on its own right and this article will provide more guidance on how to trade the NFP. Usually Tony discusses NFP related matters but this time around I wanted to share my 2 cents as well. Before we do that, we are going to cover the basics of the NFP, discuss the importance of NFP for different types of traders, discuss this month’s NFP figures and strategy, and then explain a methodology how to trade the actual NFP.

NFP IMPORTANCE

Just to cover the details: NFP is the Non-Farm Employment Change and it calculates the total number of paid U.S. workers of any business but excludes government employees, private household employees, farm employees, and employees of non-profit organizations (to individuals). It accounts for +/-80% of the workforce who produce the entire GDP of the U.S. and is a statistic researched, recorded, and reported by the U.S. Bureau of Labor Statistics and is released on every first Friday of the month.

The unemployment rate indicates the percentage of the total labor force that is unemployed but actively seeking employment and willing to work.

These two news events are the biggest and most volatile news releases in the Forex market. Nothing matches a day like today. The news events are vital for policy makers, economists, traders, business owners, investors, etc to decipher the current state of the economy and predict future levels of economic activity.

a)      If the NFP is expanding, this is an indication of economic growth. Economic growth leads to potential inflation, which is followed by an increase of interest rates to compensate inflationary pressures, which in turn makes the currency more attractive and competitive versus other currencies.

b)      If the NFP is contracting, this is an indication of economic decrease and has opposite effect compared to the above, which makes the currency less attractive (lower interest rates, quantitative easing).

NFP Trading in Forex

What is NFP impact on forex trading?

Our ultimate guide on how to trade NFP is continuing with a series of questions to help explain the factors affecting forex market during NFP.

QUESTION 1) How do we interpret the NFP figure itself?
Traders and other stakeholders are comparing the actual NFP figure to the expected NFP figure.

a)      If actual data comes in lower than economist’s estimates – USD weakness expected / short USD

b)      If actual data comes in higher than economist’s estimates – USD strength expected / long USD

QUESTION 2) What currency pairs to trade?
Most often the best currency pairs to trade an NFP release are the majors: EURUSD, USDJPY or GBPUSD.

QUESTION 3) Do we want to trade NFP?
It depends on what type of trader you are and how risk averse you are.

The short and simple answer is: NFP is good for scalpers and long-term traders and not recommendable for intra-day traders picking 1 position a day (using 15min-1 hour time frames).

1)      Technical traders use technical analysis for the decision-making process. This trader often avoids trading on NFP days. Contrary to other news events the impacts of the NFP are so heavy that typical trading comes to a halt. This is ok: remember that the goal of a trader is not to catch every single piece of price action. That is why we have a trading plan which filters price action and allows us to focus on trade setups with positive expected returns. There are some differences depending on which time frames you use and what type of trader you are (know yourself):

  1. Intraday trader: very difficult to trade due to quietness before NFP release and volatility after it. Usually, stop levels are not safe.
  2. Swing trader: difficult but doable. A trader using 4 hour or day charts can take long-term positions if a wide enough stop loss is used to survive the volatility and if a good major turning spot is identified.
    The NFP can be the beginning of a new direction and trend so for swing traders it can be important to be active and aware of that.
  3. Position trader: chances of a trade occurring during the day are small, most of the time this trader is an end of day trader anyhow.

impact on forex

2)       Fundamental traders: the floor is yours/it’s your show.

3)      News event traders: the floor is yours/it’s your show.

4)      Scalpers: the floor is yours/it’s your show.

QUESTION 4) Can everyone trade everything during NFP?
No. It also depends on which type of movement during the NFP:

a)      1st movement à Institutions. Typically the first reaction occurs so fast that is only traded by institutional traders that have access to the fastest information and technology as the reaction to the news is within a split second. Price can jump so fast that it changes within the blink of an eye.

b)      2nd movement à open to all. The currency has moved up / down and maybe even both for a few minutes. After the currency settles down and pauses for a few minutes, a trader can evaluate the NFP released figures versus expected, compare that to price movements and technical analysis and judge whether the NFP trading can make sense.

AUGUST 2017 NFP

I am curious, especially this month, to find out the direction of the U.S. economy. The NFP news release is due at 8.30am EST time on August 4.

a)      Is the NFP figure and unemployment rate decreasing, increasing or stable?

b)      How will this affect the U.S. economy and the world economy?

c)       How will it affect the FED’s accommodative policy?

Tons of questions as you can see. And the NFP is great a measurement to provide answers to these questions. What do you think? Write us down below!!!

 

What is your NFP trading plan? Write us down below!

NFP STRATEGY FOR TRADING FOREX

Now we are going to discuss how an NFP strategy for the Forex market could look like. Please be aware that it is crucial for every trader to do their own demo testing, back testing, paper testing, etc before trading live. Past results do not guarantee similar outcomes in the future.

There are some advantages of trading the NFP:

1)      NFP is very volatile;

2)      Provides opportunity to exploit fake-outs;

3)      Quick in and out to grab pips;

There are disadvantages as well:

1)      NFP is very volatile;

2)      There could be spikes in both directions – never straddle the market;

3)      Due to emotions in this environment, key levels have less influence and market can overextend in a direction and then reverse;

4)      Stop loss size can be larger and might not be respected (depending on broker).

Here is a method how a Forex trader could trade the NFP:

STRATEGY FOR trading

  1. The NFP figure causes the price to spike in a direction (up or down is irrelevant).
  2. The price continues up or down for a minute or a couple of minutes and then pauses without breaking the new extreme (high or low).
  3. Wait for a small pullback.
  4. Conservative traders would enter the trade 1 pip above or below the new extreme (high or low).
  5. Aggressive traders would trade the retracement.
  6. Stop loss 1 pip on the opposite fractal.
  7. Exits:

a)      Target 1:1 r:r

b)      Next major resistance or support

c)       Time filter: trade should not take more than 20-30 minutes (20-30 bars of 1 minute)

Be careful though. If there is not enough momentum or deviation in the NFP release, the market could quiet down after the initial reaction. In that case, there would be not much trading left to do. The bigger the deviation between expected and released numbers, the higher the chance that the market will maintain its volatility – even after the first reaction which is seen in the first minutes.

2- 8- 2013 EU MIN

Thank you for taking the time to read this article on NFP trading in forex. We are confident that you can see the impact on forex that the NFP can have and found a strategy for trading through it. As always, Good And Safe Trading today and thank you for reading & sharing this article!

Hope you enjoyed this article on NFP trading in the Forex market!

Please write down below what you expect of today’s NFP? Thanks!

https:[email protected]

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