I've been meaning to start a blog on forex and fundamentals for sometime now but things kept getting in the way and found myself shelving and shelving. Finally I've found some respite to the daily grind to start putting things together.
Before anything else I think some explanations are in order. First off the title, FX FunnyMentals this is not to say that I do not take the matter seriously but the play in words refers to how often I have seen markets reacting completely outside of textbook Ã‚Â wisdom.
No don't send those Econ manuals to the trash bin just yet, I'm not saying that they do not work, in fact I have a healthy respect for those and keep quite a few of them close myself. What I would like to point out is often times people become much too fixated about this or that data coming out that in all the hawing and gnawing over what this and that analyst is saying the market has moved. Ask yourself, how many times have you waited and waited for that 'high impact' data only to see markets give you a 20-pip move and missed out on the runners.
Unfortunately there is no panacea for this that I know of, short of becoming a pure technician (I use technicals as well for timing my entries but have an 'obsession' for data). What we can do however is try to understand the context of the numbers coming out: what do they mean, how did they do before, what was the markets reaction. In answering such questions we should be able to properly plan on how to react to the numbers, if such attention is even warranted.
For succeeding posts in FX Funnymentals we plan to discuss pertinent issues for the market and develop actionable if-then conditions for economic releases. We will review market action and try to find out what exogenous forces were at work. Ideally further updates on this blog should be posted before or around the open of Tokyo markets.