Correlation between economic numbers release and currencies movement

Hello,
I would like to ask a very important question: why would the USD go up (and sky high) as soon as a lot of important and NEGATIVE numbers are released in the economic calendar related to it? You certainly expect right the opposite. And this happens very soon and I lose money because of that. And I don’t even know why.
Other times when the numbers are positive it goes up (with 2-3 very long candles for a short time) but then again something not logical happens - it goes down the same height and that’s it.
I trade using the economic calendar and I haven’t notice other currencies to have this behaviour (and if they do sometimes it is certainly not so often).

welcome to the forum!

those negative numbers are often negative for the US indices, not for its currency

often the S&P and Dow Jones take a fall on negative economic announcements, and that will tend to put the dollar up, not down

the reason for that is that the companies comprising those indices tend to be companies that export a lot, so they get paid in foreign currencies

it makes sense, economically, if you think about it? :slight_smile:

The market lives in the now and the immediate future.

That now in recent times is about int rates - king of FX is the CB - and the focus of the Fed is inflation.

A CB will fight inflation with a blunt tool - int rates - threat of rising inflation means threat of rising rates - or reverse.

Thing is if you are in business then one of your major costs (after payroll) is interest to the bank.

So right now a ‘possible’ rise in int rates = negative business (stocks).

Then again if you are not in business but merely a guy with money (investor) seeking return (interest rate) then if USD likely to have better rates - you will buy USD investments - more USD demand and positive USD.

Apologies for long winded response - much simpler is to look today at USD - an up day.

Then look at S&P - a down day.

Then think about Fed Governor Christopher Waller talking up rates today.

Then think a little longer term - is US inflation likely to rise further etc.

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Thank you for your reply. Yes, it makes sense. But how do I know which numbers are good for the currency (bad for indices) and bad for the currency (good for indices)?

Thank you for your response, too. I understand what you’re saying.

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Hey flamingoproxy, I’ve noticed you seem pretty knowledgeable. Mind if I ask how long you’ve been trading? :expressionless: