Jeepson Trading have a unique method to determine the performance of an economy. This method is two form, firstly high level analysis which looks at the key indicators. And then, low level analysis which is an analysis of the indicators of the central bank’s focus area.

High Level Analysis

High Level Analysis (HLA) is the process of analysing the key indicators of an economy and determining the subsequent performance. The key indicators are as follows;

  • GDP Growth Rate
  • Unemployment Rate
  • Inflation Rate
  • Interest Rate
  • Balance of Trade
  • Government Debt to GDP

The individual performance of each indicator is analysed over a twelve month period to determine the the high level economic performance.

Central Bank

The Federal Reserve is the central bank of the united states who has a dual mandate to maintain price stability and achieve maximum sustainable employment.

At their previous meeting on November 8 they stated that the focus areas are the labour market and inflation. These can be monitored by reviewing the performance of the Significant Indicators (SIND).

Low Level Analysis

Jeepson Trading have identified the following SIND that are to be monitored for the low level analysis.

Labour

  • Non Farm Payrolls
  • ADP Non Farm Payrolls
  • Average Hourly Earnings

Inflation

  • Producer Prices Change
  • Core Inflation Rate
  • Inflation Rate Month on Month

Conclusion

High Level Analysis: strong economy with an improving outlook

Low Level Analysis: strong indicators with an improving outlook

BUY from the Support levels of Technical Analysis.

Even though there has been a mix of data, the trend has been improving over the previous twelve months.

The release due on November 28th is expected at 3.50 percent which will maintain the uptrend.

US GDP Growth Rate courtesy tradingeconomics.com

Fundamental and Geopolitical Analysis


measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments

Central Bank focus points
  • No other significant news events at this time

Sentiment Analysis

  • Dollar is in a bullish period over the previous week

Order

Orders to buy are good at appropriate levels determined by Technical Analysis here


Image credits: Aron Van de Pol

High Level Economic Analysis

Summary Indicators (SUIN)

The Federal Reserve are planning to raise interest rates again and a decision to do so is based on the performance of Labour and Inflation.

On review, the SUIN are in great shape and support buying the US Dollar.

Low Level Economic Analysis

Significant Indicators (SIND)

The SIND have been identified based on the focus of the Federal Reserve.

All indicators are performaing well and I expect the Inflation Rate Month on Month is being closely monitored. Should this show a strong result then a December hike is highly likely.

On review, the SUIN are in great shape and support buying the US Dollar.

Technical Analysis


Live charts can be viewed here

There are six indicators that are used to judge the performance of an economy:

  1. GDP Growth Rate
  2. Unemployment Rate
  3. Inflation Rate
  4. Interest Rate
  5. Balance of Trade
  6. Government Debt to GDP

Balance of Trade and Government Debt to GDP are the only two that have worsened over the previous twelve months.

The Federal Reserve are monitoring the labour market and inflation to decide on further rate hikes. Fed fund futures have over 70 percent probability that a hike is happening, however this has dipped from over 75 percent.

Photo by David Everett Strickler on Unsplash

United States Inflation Rate

The trend has been improving over the course of twelve months although more recently has been falling from the high’s of June and July of almost three percent.

The consensus forecasts the inflation to rise again following on from five releases of month on month stagnation.

United States Inflation Rate
US Annual Inflation

Fundamental and Geopolitical Analysis

Recent comments from the central bank…

…supporting strong labor market conditions and a sustained return to 2 percent inflation.

  • Other than the mid term elections last week there are no geopolitical events of concern.
  • Interest rates remained on hold at last weeks FOMC meeting.

Sentiment Analysis

  • Dollar has gained strength following the interest rate decision and coming out of a lull in the run up to mid term elections.

 


Photo by James Balensiefen on Unsplash

United States Non Farm Payrolls

The trend is rising over a twelve month period, held steady for a six month period and could be considered to have declined over a three month period.

United States Non Farm Payrolls

With a consensus of 180 thousand, nothing changes too much from a trend view.

Technical Analysis

 Chart Trend Direction Trend Break Zone 
 Day Up 111.40
Four Hour  Down 112.70
Thirty Minutes  Up 111.70
  • Low risk entry at  111.85
  • High risk entry at N/A

Fundamental and Geopolitical Analysis

“The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation.”

  • Stock market sustained losses in previous week but set to recover

Sentiment Analysis

  • Traders direction mixed but it appears more are opn the sidelines than invested so a rally could be expected.

Order

Buying up the dollar from low risk entry makes sense fundamentally in the run up to Non Farm Payroll release.

TRADE APPROVED


Image credits: Aron Van de Pol