Market Update for June 16
Yesterday it was quiet early in the trading day and then things really picked up after the New York Empire State Manufacturing Index came in weaker than expected. Then things really kicked into gear when US Industrial Production came in at -0.2%. This data was bearish for the dollar and I went long the euro as a result.
As you can see from the above chart, the US Industrial Production numbers hit the tape at 9:15 EDT. From there, the EUR/USD trended higher for the rest of the session. I made money, but I got out a little too early. Oh well, at least I made money and that's all that matters at the end of the day.
For my followers, I can't stress this enough - you need a reason to trade. Why are you in a trade? For this trade I went long because the data was bad for the US. Weak data signals that the Fed may hold off on raising interest rates. This is bearish for the US dollar and why I did the trade. News, headlines and data drive the global currency markets. Combine that with the technicals and market sentiment, and you'll come out a winner most of the time.
On today's agenda we have UK CPI data coming out at 04:30 EDT. Expectations are for May CPI (YoY) to come in at 1.0%, up from 0.8%. PPI Input (MoM) is forecast to be unchanged from the prior reading of 0.4%. Inflation data is critical for currencies because if it comes in hot and higher than expected, that means the Bank of England has to consider a rate increase to tame inflation. Rate increases are bullish for a currency. If the data is cooler than expected, then the Bank of England can hold off on raising interest rates and that's bearish for the pound.
At 0:500 EDT we have the German ZEW Economic Sentiment for June. Expectations are for 37.1, down from 41.9 in the previous month. Since Germany is the economic engine of the euro zone, this data is important in trading the euro.
At 08:30 we have Building Permits and Housing Starts in the US being released. Since housing is such a big component of the US economy, this news is critical for the US dollar. There's a lot to digest here so I recommend waiting 5 minutes for all the data to sink in before putting on a trade.
For today, I don't have any specific levels that I'm looking at. I'll look to digest the data and then trade accordingly. As always, best of luck to everyone and happy trading!
