The Fundamental FOREX Blog

On Friday 03-19-09 at 10:00 AM ET, the USD-Philadelphia Fed Index report will be released for the month of February.

The previous USD-Philadelphia Fed Index report came out on Wednesday 02-19-09 at 10:00 AM ET.

The USD-Philadelphia Fed Index report released in February, for the month of January, was set up as follows:

Previous Report: -24.3 – up from -36.1 in the January report.

Economists Forecast: -24.1 – an improvement for the US economy.

The actual report: -41.3 – deeper than forecast by -17.2%, bad for the USD.

The last 4 USD-Philadelphia Fed Index “previous” reports have NOT been “revised” just a few minutes after the actual report release.

The “revisions” could have an had an effect on the currency market – but I have not seen it yet.

I monitored 4 currency pairs during the February USD-Philadelphia Fed Index report and here is what happened:

EUR/USD – moved in favor of the USD about 70 PIPS in 37 minutes – wrong direction

GBP/USD – moved in favor of the USD about 130 PIPS in 37 minutes – wrong direction

USD/CAD – moved in favor of the USD about 100 PIPS in 59 minutes – wrong direction

USD/JPY – Moved down/up only – no real direction

The USD-Philadelphia Fed Index for this month’s release ( a report on February USD-Philadelphia Fed Index) has a “forecast” of  -31.1, an indication of improving economic health.

If the “actual” USD-Philadelphia Fed Index report comes out less or more than the “forecast” by a large amount, say 8.0 or 10.0 or more, this would be a huge surprise for FOREX traders and the market may move considerably in the following minutes of the report.

So, let’s set this up:

The February previous= -41.3
The economists forecast= -31.1

If the “actual” report comes out -22.1 or more, this will be good for the USD, and a big surprise for traders. Any currency pair which includes the USD may move with the USD.

However, if the “actual” report comes out at -39.1 or less, this would be bad for the USD and again, a big surprise for traders. Any currency pair which includes the USD may move in against of the USD .

The probabilities set forth above are assuming no unpredictable events are taking place at the same time.

Speeches on the economy by government officials, or a situation somewhere in the world that could have an impact on the U.S. or Canada economy – could adversely affect the market.

Sometime after the end of the USD-Philadelphia Fed Index report I will post the results. So, check back!

Wednesday 03-19-09:

Here are the results of USD-Philadelphia Fed Index report:

The “previous” (February report) was -41.3
The “Forecast” was -39.1
The “Actual” came out at -35.0 – and no “revision”

A difference of +4.1 from the “forecast” was NOT enough to catch the market by surprise at least 8 was needed, and since this report was in favor of the US economy anyway, those currency pairs which involved the USD, the market moved somewhat  in favor of the USD.

However, I believe that the current world economic situation is causing a bit of confusion for FOREX traders.

Here is how it affected the 4 currency pairs I follow:

EUR/USD - moved up about 16 PIPS 1st minute - wrong direction
then moved down about 31 PIPS in 8 minutes – right direction
moved up about 80 PIPS in 26 minutes – wrong direction

GBP/USD – moved up about 16 PIPS 1st minute – wrong direction
then moved down about 25 PIPS in 6 minutes – right direction
moved up about 80 PIPS 36 minutes – wrong direction

USD/CAD – moved up about 28 PIPS in 9 minutes – right direction
then moved down about 48 PIPS in 17 minutes – wrong direction

USD/JPY – moved down about 7 PIPS 1st minute - wrong direction
then moved up about 10 PIPS in 8 minutes – right direction
moved down about 100 PIPS in 25 minutes – wrong direction

It looks like none of the currency pairs were tradable.

But, the EUR/USD currency pair could have been “scalped“ for a few PIPS.