FOREX THEORY
Market Expectations to News and Their
Impact on Currencies (Part 4)
What the Heck? They Revised the
Data? Now what?
Too many questions… in that title.
But that’s right, economic data can
and will get revised.
That’s just how economic reports
roll!
Let’s take the monthly Non-Farm
Payroll employment numbers (NFP) as an example. As stated, this report comes
out monthly, usually included with it are revisions of the previous month’s
numbers.
We’ll assume that the U.S. economy
is in a slump and January’s NFP figure decreases by 50,000, which is the number
of jobs lost. It’s now February, and NFP is expected to decrease by another
35,000.
But the incoming NFP actually
decreases by only 12,000, which is totally unexpected. Also, January’s revised
data, which appears in the February report, was revised upwards to show only a
20,000 decrease.
As a trader you have to be aware of
situations like this when data is revised.
Not having known that January data
was revised, you might have a negative reaction to an additional 12,000 jobs
lost in February. That’s still two months of decreases in employment, which
ain’t good.
However, taking into account the
upwardly revised NFP figure for January and the better than expected February
NFP reading, the market might see the start of a turning point.
The state of employment now looks
totally different when you look at incoming data AND last month’s revised data.
Be sure not only to determine if
revised data exists, but also note the scale of the revision. Bigger revisions
carry more weight when analyzing the current data releases.
Revisions can help to affirm a
possibly trend change or no change at all, so be aware of what’s been released.
 What the Heck? They Revis...){kind=link}
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