Would anyone know why FX calendar considers actual vs forecast more important than the previous number? In the image, actual was up but not considered up (green) and then actual remained the same from previous but considered negative.
Why is the forecast more important than actual numbers?
What moves prices is the order-book, which displays the difference between buying pressure and selling pressure.
Many things are already “priced in” (i.e. expected/anticipated) and allowed for by the buying and selling pressures. Just like, with a stock price, the market already knows that it will fall a little post-dividend: how big the dividend is can make a big difference to that, but how much the previous dividend was isn’t relevant.
Similarly with (say) interest rates. If the market expects that after the announcement interest rates will be 3%, then that expectation is already “priced in” and the current order flow allows for it. If, after the news, it turns out that interest rates are unexpectedly 2.75% or 3.25%, that’s going to make a huge difference to buying/selling pressures and therefore to the order book, and therefore prices will move very dramatically. Whether the previous announcement was up/down or 2.5%/3.5% makes no difference. Why would it?
In short, it isn’t the forecast that’s more important than the actual numbers: it’s the difference between the forecast outcome and the actual outcome. (Previous outcomes are barely relevant, if at all.)
That makes sense and I agree. TY! And the speculation regarding rate cuts being priced in after much deliberation leading up to it, as well. Basically making the previous number somewhat irrelevant.
However, things like retail sales, building permits, that are based on the actual market data would seem to be clear evidence of market direction vs a forecast.
So in the short term I can see a news bump in either direction but the overall trend, in my ignorant opinion, would seem to follow the data.
