Never cut and dried

Posted by Scriptaty | 9:10 PM

Although economic numbers can offer great insight into the economy and the behavior of the FX market, it’s risky to put too much emphasis on an individual reading because many economic numbers fluctuate dramatically from month to month. Also, almost all of these numbers are released after the fact.

For example, although the employment report is generally regarded as the most important economic report in all markets, it is a lagging indicator and there are often tremendous changes in the payroll figures from month to month. The difference between October, when 337,000 jobs were created (nearly double what Wall Street expected), and September, when only 96,000 jobs were created, is a recent example. Accordingly, analysts and traders often average certain economic figures over several periods to smooth the readings.

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