7:01 PM
AGHA
Howdy, traders.....
In this post (and maybe later) I'd like to explain something statistical; correlation study. I myself choose the correlation between NFP data release and EUR/USD. Correlation measures the strength and direction of a linear relationship between two variables, in this case, NFP and EUR/USD. The result will be completed with a scatterplot/ scatter diagram.
How do we interpret a correlation (r) value? It's simply like this, The value of r is always between 1 and -1.
If you get a positive value, it indicates that the correlation has an uphill (positive) trend. On the contrary, if the value is negative, the relationship has a negative trend. If it's zero, it means there's no linear relationship.
I took the NFP data from fxstreet.com and EUR/USD from AGEA with a range between May 2013 until April this year. You can look at the pictures that the r value was 0.0477 which means it hasn't any strong relationship. As a result, The Scatterplot's dots were totally scattered. Since they're scattered, means no pattern of the trend. Once again, they're actually have a weak linear relationship. Despite having a weak relationship, NFP is quite influential in moving the price of USD. That's why I suggest you to make better combination of data to gain a good result.
FYI, today is the end of April, prepare yourself for the next NFP data release on the first Friday of May.
