Forex Minute Trade Plan – Fundamental Insights 25/04/2014

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Forex Minute Trade Plan - Fundamental Insights 24/04/2014

Forex Minute Trade Plan - Fundamental Insights 25/04/2014

Here’s a look at the day’s key fundamental releases, and their likely impact on the global currency markets.

With Australia and New Zealand closed for business, the day’s major releases come out of the US, and more specifically, Michigan.

Michigan Consumer Sentiment

The first of two Michigan based releases, the consumer expectations figure is a survey of about 500 consumers which asks respondents to rate the relative level of current and future economic conditions. Generally released on the final Friday of each month, the figure offers insight into the expectations of the general public as far as the economy is concerned. This insight is important, because individuals tend to be more economically active when they have positive expectations. Higher individual activity (consumer spending) leads to increased output and, in turn, employment.

For this reason, a higher than expected figure will generally be positive for the US dollar, while a lower than expected figure will generally be negative for the currency. Consensus forecasts the release at 83.2, a small gain over the previous release of 82.6. Therefore, look for a figure below 83.2 to translate to USD weakness versus its major counterparts, with the reverse being true for a release above 83.2.

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Flash Services PMI

The day’s second headliner, also out of the US, is the flash services purchase managers’ index release. The release is a numerical representation of a survey of purchasing managers across the services industry. Purchasing managers are generally the first to respond to changing business conditions, and so their opinions on the outlook of their respective industries can act as a leading indicator of economic output.

Traders look for a figure above 50 to indicate industry expansion and a figure below 50 to indicate industry contraction. This, however, is not what will move the markets on today’s release. Instead, a surprise will be what impacts the strength of the US dollar. Consensus forecasts the release at 56.2, so look for a figure above 56.2 to translate to USD strength, with the reverse being true for a release below 56.2.

To contact the reporter of this story: Samuel Rae at Samuel@forexminute.com