Reading the reaction against the expectation instead of the number

[Amanhasnoname]

A strong number does not always push a currency higher. What matters is how it compares with what the market expected, and with how positioned the market already was.

If everyone expects a big beat and the data comes in slightly above forecast, the currency can fall, since positions were already priced for more. A modest miss in a market braced for disaster can trigger a rally.

The reaction itself offers information. A currency that fails to rise on good news signals weakness. One that holds up on poor data signals strength underneath.

For short-term traders, the initial reaction in the first minute or two reveals the market's positioning. Fading a move that lacks follow-through, or joining one that continues after a pullback, uses that information.

It also helps to check the consensus forecast and the range of estimates before the release. A forecast at the extreme of the range sets up a different reaction from one in the middle.

How is the market reaction read after major data, by the number or by the response?