Every trader, even a less advanced one, knows that there are two important events in the economic calendar that require special attention as they have a huge impact on the US dollar and stock indices.
The first are the decisions of the FED, in other words, the Federal Reserve – the US central bank. The Federal Reserve System consists of a seven-member Board of Governors with a term of office of 14 years and 12 minor banks responsible for a given area of the United States. Formally, the third component of the Fed is the Open Market Operations Committee (FOMC), which consists of members of the Board of Governors and 5 governors from 12 banks, one of which is the president of a New York bank and the remaining four are elected on a rotational basis. The member banks, which are shareholders in the 12 major banks of the Fed, are also considered part of the Federal Reserve System. At its meetings, which are held every 6 weeks The Federal Reserve determines monetary policy, including setting interest ratesthat is, in short, the cost of money.
Good payrolls mean higher interest rates?
The second, no less important, economic event is the NFP. Non-farming payrolls (NFP) determine the level of employment in service, production and construction enterprises, excluding the number of agricultural workers, people employed in households, and governmental and non-profit organizations. The data concerns over 3/4 of all employees in the US, who have a direct impact on changes in GDP. The results are published every first Friday of the month by the US Department of Labor. The indicator illustrates not only the condition of the economy, but also allows to predict changes in world markets and is an indicator that the Fed looks closely at when making polmon decisions.
Inflation in the US – Wednesday, August 10 at 2:30 PM
But there are also other important indicators that have become particularly important recently, namely the core CPI inflation level. The FED, which is the guardian of proper monetary policy, aims to bring inflation down to a “healthy” level of 2-2.5% with the least possible harm to the labor market. July payrolls turned out to be very good – 528 thousand. and exceeded expectations by 130 thousand. On this Wednesday, August 10 at At 14:30 we will know the level of inflation month / month and year / year.
Economic calendar Wednesday 10 August A decline from 9.1% to 8.7% y / y is expected. If, with the above-mentioned good payrolls results, inflation turns out to be higher than expected – this may be taken by the market as a signal for the FED to tighten the polmon and more aggressively raise interest rates, and thus another wave of dollar strengthening against other currencies and a decline in stock exchange indices in USA.
Technical analysis of the SP500 index
Discarding the fundamentals, let’s take a look at the technical picture of the SP500 index. There is an upward correction in the H4 chart, the local trend line is dashed. The index reached a strong supply zone.
I will analyze the SP500 index and several currency pairs tomorrow live (Tuesday, August 9, 2022) at 5:30 PM. There will be an opportunity to see my PA + MACD strategy. I invite you to live broadcast on the Global Markets channel on youtube.
I also invite you to read my previous article, where I pay attention to the underestimated and very important indicator in trading, which is drawdown. Follow us on Google News. Search for what’s important and stay up to date with the market! Watch us >>