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In our last lesson we finished up our series on what traders watch for when analyzing the long term direction of the dollar. In today's lesson we are going to continue our free forex course, with a look at where to go to find the economic data releases that move the dollar.
As you can probably imagine, we could spend many lessons and multiple hours going over each of the economic indicators that affect the price of the US Dollar. It is for this reason, that before getting into any of the actual indicators, I wanted to give everyone an overview of the broad things that move the market. As we have discussed in previous lessons the two broad categories that pretty much everything that moves the forex market fits into, are trade flows and capital flows, as covered in module 3 of this course.

Once you have an understanding of this, all that is necessary to understand how economic numbers move the dollar, is to understand which numbers are important to the market at the time, whether those numbers fit into the trade flows or capital flows category, and how they should affect the dollar as a result.

As we learned in module 8 of our basics of trading course, how the market reacts to economic releases is generally determined by two factors:

1. How important the market considers a particular release to be.

2. How close to market estimates the number comes in at. Remember that markets anticipate news, so generally if an economic release comes out as expected, there is very little if any market reaction to that release.

How important the market considers a particular economic release to be, is something that changes over time depending on what is happening from a US Dollar fundamentals standpoint. If there are worries that the economy is going into recession, then the market is going to be extra sensitive to any numbers, such as non farm payrolls and consumer spending, which may provide early warning signs that this is the case. Conversely, if the economy is heating up and the markets are worried that inflation may become a problem, then the most market moving numbers may be price data releases, such as the CPI and the PPI. For your reference, according to Dailyfx.com the most market moving indicators for 2007, in order of importance were:

1. Non Farm Payrolls
2. FOMC Releases
3. Retail Sales
4. ISM Manufacturing
5. Inflation
6. Producer Price Index
7. The Trade Balance
8. Existing Home Sales
9. Foreign Purchases of US Treasuries (TIC Data)

We have discussed most of these indicators already, and for those which we have not, a quick google search, and review of the indicator in the context of whether it fits into trade flows or capital flows, should answer the question of why they move the market.

Although I am probably a little biased since I used to work with the people who run the site, I am a very big fan of Dailyfx.com as the place where I go to find out what economic data is due for release, and for commentary on the number after the release. They have a great global calendar which you can find at the top of the site as well as tons of both technical and fundamental commentary on everything that affects the US Dollar and forex market in general.

For this lesson specifically, if you click the calendar button at the top of the site you will see they have all of the economic data releases from the major countries of the world with the time of the release, the previous number, the forecasted number and the actual number which is updated after the release. You will also notice here they have links for the more important numbers giving a definition of the release, the relative importance of the release, and the latest news release relating to that release.

If you click back to the homepage of the site you will see lots of fx related reports which the Dailyfx staff puts out throughout the day. Two of my favorite reports are the Daily Fundamental report by Kathy lien, and the US Open Market Points by Boris Schlossberg which you can find in the middle of the page.

As we discussed in module 8 of our basics of trading course, the best way to get a feel for how economic numbers affect the market, and which numbers are in focus, is to start following the market on a daily basis and seeing how it reacts to various news events. As this is the case, I highly recommend following the commentary on Dailyfx.com as well as the forex commentary on InformedTrades.com, and start putting your analysis to practice on your real time demo accounts. If you have not registered for a free realtime demo account I have included a link above this video where you can do so.

That's our lesson for today, and that wraps up our discussion on the US Dollar. In the next lesson we are going to look at the next most traded currency in the world, the EURO so we hope to see you in that lesson.

As always if you have any questions or comments please leave them in the comments section below, and good luck with your trading!

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USA Worlds Largets Economy
Today Worldlargets economy under crisis and under fear or in reccission and that is long time reccission due to housing and financial crisis .Although USA Govt. Push $700B rescue bill although Congress rejacet bill befor now again in Congress home ground and Govt.want to purches sick Assesst to restor confidance but according to my thought that step puch USA Economy in more problem due to Banks lossing confidance to lend the people due to raising default of People and tight more Lending rules,although cradite line is blood for Economy according to Mr.Ben Fed Chairman .And USA's Nation need more money for Purching Cars ,Home,home aplances and Children Eduction other side banks now have tight lending rules and mostly people didnt qulifiy for loan aand business also facing tight lending rules and might be bank will more tight candation in future and according to my thought if Cingress will delay in passing bill that for one or two month then more financial institution will clloupes in future and if its happen then Might be USA loss its grip as save havean assesst .Although Govt. Take step to purches Sick assesst and that all of infacted from housing sector but Govt. still dont have any rescue packege for housing industries and housing relatiad industries is now at edge of clloupes .How they get banifit from sick assesst ?Although its temparery breath for USA Economy and might be boost prices of that sick assesst but that will again in falling after fade result in future .
CRADITE RATING
According to my thought Congress Must pass bill which is $700B that will not sporrt of USA cradite Rating whihc is now at AAA+ according to Moody.Com due to Rescue plan its will raise Budject Dificit more then $1.3T and according to my thought it will raise more then $1.6T ,and tight lending rules will cut spending and housing business will clloupes and more Jobless Rate will raise and according to my thought it will raise more then 7.5% in coming Qs. Housing also have also clloupes and more bad time still in .due to falling home values make less wealthy then befor start crisis and housing and financial crisis force companies to cut it cost and companies will raise job cutting in future and now Manufacturing inclouding PMI of Manufacturing at 43.5% and USA Companies will cut more spending and house hold spending will fall more due to jobs cuting and Spending contribute more then two thired of USA growth and Manufacturing contribute more then 15% of USA growth ,Trade Deficit have been raise again which is now at $62B . Pay roll cut every month companies cut more then 400000 jobs from start crisis .and according to my thoght although Euro and dollar exchnage rate will come down and might be hold at 1.1000 to 1.1500 .
And According to my thought Euro will get more then 50% share of reserv which is now at 26% and dollaor will reached at 45% share of reserv which is now at 63% in future.

COMMODITIES BEHAVIOUR
Oil Price will be fall according to my thought due to reccission in worlds largets economy of USA, Euro ,UK, Japan and that all economies push globel economy in Reccission also and whole world will facing jobless rate raise and job cutting will cut spending and that will cut demand of more oil and oil will facing down side direction but Gold can gain ground against dollar no more comoodities geting any kind of banifit from Reccission in major economies of worlds . So selling in Comoodities and major Currencies against Dollar but not for long time for short time which might be 2Q or 3Q.



Reprt by :- Faiz Rasool