Positive Philly FED Survey Ignored On Open - Forex News by FX Leaders
The FED is expected to be dovish today as global weakness continues

Positive Philly FED Survey Ignored On Open

Posted Thursday, July 18, 2019 by
Shain Vernier • 2 min read

Early trade on Wall Street has been a rough affair, with the DJIA DOW (-31), S&P 500 SPX (-4), and NASDAQ (-19) in the red for the first half-hour of trade. The Philadelphia FED Manufacturing Survey for July (also known as the Philly FED Survey) smashed expectations during the pre-market hours. Thus far traders have ignored the good news, choosing to limit risk going into late-week trade.

During the pre-Wall Street open, the Philly FED Survey (July) was released to the public. The number came in at 21.8, crushing consensus projections (5.0) and the previous release (0.3). This is an extremely strong figure and suggests that the U.S. manufacturing sector is breaking out of its relative slumber.

DJIA Falls Following Strong Philly FED

Today’s early action on Wall Street has been bearish, with the DJIA in danger of posting a third-straight losing session. Subsequently, September E-mini DOW futures are challenging downside support.

September E-mini DOW Futures (YM), Daily Chart
September E-mini DOW Futures (YM), Daily Chart

Overview: In a Live Market Update from Wednesday, I issued a buy recommendation in the September E-mini DOW. Once again, going long on a dip proved profitable, with the trade hitting the 40 pip profit target. Now, the key level for September DOW futures is the 38% Current Wave Retracement at 27114. If this level holds as support, maintaining a bullish bias is a good idea.

Equities are off this morning in part because of the strong Philly FED Survey. In reality, it casts doubt on how long the FED will hold a dovish stance toward policy. This has many traders reevaluating their perspective regarding the FED being receptive to quantitative easing.

At this point, a 100% chance of a rate cut ― either ¼ or ½ ― is being assigned to the July 31 FOMC meeting by the CME FEDWatch Index. After July 31, the picture becomes much hazier. It stands to reason that strong figures such as today’s Philly FED Survey don’t bring much clarity to the situation.

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About the author

Shain Vernier // US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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