Forex Trading involves high risks, with the potential for substantial losses and is not suitable for all persons. Past performance is not necessarily indicative of future results.

Consumer confidence and manufacturing activity improved materially in the month of April, leading many currency traders to wonder if the U.S. economy is flirting with a recovery.  Manufacturing was one of the first sectors to crumble, but the pace of contraction has been slowing over the past 4 months.  Even though the ISM manufacturing index is still below 50 which means that activity is contracting and not growing, the sector is crawling back towards expansionary territory. The worst may be over but it is still far to early to label this a manufacturing sector recovery because factory orders fell more than expected in March. The U.S. is not the only one to enjoy an improvement in manufacturing, the U.K. and China also reported stronger numbers this morning.  Nearly all components of the U.S. manufacturing ISM report increased in April.  Inventories was the only component that declined but this is positive because lower inventories means that companies may have to restock soon.

The University of Michigan consumer confidence survey was also revised higher from 61.9 to 65.1 in April to a 7 month high.  The resilience of U.S. equities is playing a very large role in the improvement of sentiment.  Yet the gains in currencies and equities were fleeting as the market grows concerned about the Fed's decision to delay the results of the stress tests on U.S. banks.

The currency market next week could be very volatile since there will be public holidays in both the U.K. and Japan on a week when 2 central bank rate decisions and the U.S. non-farm payrolls report are due for release.

Why have the Bank Stress Tests Been Delayed?

About The Author

Kathy Lien began her FX trading career 10 years ago at J.P. Morgan Chase. After graduating New York University’s Leonard Stern School of Business at the age of 18, Kathy joined the bank's interbank FX trading desk and eventually moved to the cross markets proprietary trading desk. In the interbank market, her ability to create solid fundamental and technical analysis from the myriad of information on the market helped her trade forex spot and options. Her experience eventually led her to be chief strategist at Daily FX where she worked until she joined GFT in 2008.

With her knowledge of forex, as well as her experience trading other products, such as interest rate derivates, bonds, equities, and futures, Lien has built a reputation as an international currency analyst. She is frequently quoted on CNBC, Bloomberg, Fox Business and Reuters. Lien has also written for publications like Active Trader, Futures, and SFO magazine. She is the author of the newly updated Day Trading the Currency Market: Technical and Fundamental Strategies to Profit from Market Moves, and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Boris Schlossberg.

To buy Kathy’s newly updated Day Trading and Swing Trading the Currency Market: Technical and Fundamental Strategies to Profit from Market Moves, click here.