Market response to any specific economic data release is far from standard even if actual numbers differ greatly from consensus expectations. Rather the market response is based on context of the current economic situation.<\/p>\n
This week\u2019s non-farm payrolls, being one of the major data points in the month, is a great case in point.<\/p>\n
There are many factors and of course the key one for you as an individual trader is your chosen vehicle you are trading (and of course direction i.e. long or short for open positions).<\/p>\n
The context of today\u2019s impending non-farm payrolls from a market perspective is interest rate expectations going forward. This week the Fed gave the market the expected .25% cut that was already priced into currency, bond and equity market pricing.<\/p>\n
The market response however, as this was already priced in, was as a result of the accompanying statement which was not as dovish as perhaps anticipated and a reduction in expectations of a further imminent cut.<\/p>\n
From an equity market point of view the result, despite the interest rate cut, was to sell off, whereas from the USD perspective this lessening expectation of further rate cuts was bullish. Perhaps this could be viewed as contrary to what the textbooks would suggest is a standard response.<\/p>\n