Buy the Rumor, Sell The News

WHY DID WE SEE THE EURO/STERLING/YEN decline against the USD?

Here were the consensus figures and actual figures of the economic news reports this morning:

Durable Orders 

Consensus: -.8% Actual: -2.4%

Initial Claims

Consensus: 315K Actual: 313K

New Home Sales 

Consensus: 1105K Actual: 1072K

Looks bad for the USD, right? Wrong.

Here are some reasons stated by members of the Oanda forums:

1. The bad numbers were expected therefore it was already priced into the market
2. Fear
3. Big longs have to take a profit and doing so during the news is a great time due to increased volatility
4. No reason
5. The "big guys" don't trade on impulse.  They need more complicated approvals, conference calls, board meetings, red tape, etc.
6. It's August.  Expect the unexpected.  Wild moves in the summer that just don't make sense are commonplace for this time of the year

Other points:

• A lower EUR/USD is needed to play the news tomorrow and now we have it.
• The prior day gives a pretty good indicator of the rumor

So I don't know what is true or not but the simple fact that there ARE so many reasons for something that is expected not happening really puts the markets in perspective.

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