Fundamental Economic Reports in Gold Trading: Major Market Movers !!!

The following Economic Reports are the most closely followed Economic Report in the Forex and Gold trading market. These news reports will cause some price volatility once they are announced, meaning there will be some pip movement in forex pairs & other instruments such as XAUUSD after these news reports are announced. The number of pip movement will depend on the market volatility rating of each news announcements, news tagged with importance of 3 exclamation marks cause high price volatility, followed by those of 2 exclamation marks & then those of 1 exclamation mark.

Most investors will mainly trade 3 and 2 exclamation mark news, as these reports will generally cause between 30 and 100 pip movement once these news announcements are announced.

The news reports followed by traders are illustrated below and reports of the news data and figures can be found within a Financial Economic Calendar.

Employment Report

• Importance: !!!
• Source: Bureau of Labor Statistics, U.S. Department of Labor.
• News Report Release/Announcement Time: First Friday of the month at 8:30 EST, reports information for the prior month

The employment data report survey produces the Non-Farm payrolls, Average Work Week, & Average Hourly Earnings figures, to name a few. Both of these surveys cover the payroll period.

Non-Farm PayrollsThe single most important piece of data contained in the employment report generally and the establishment survey specifically is Non Farm Payrolls. As the name implies, Non-Farm Payrolls measure the number of people on the payrolls of all the non-agricultural businesses. The monthly changes in the payrolls can be quite volatile, occasionally differing by more than 200K from 1 month to the next. Non-Farm Payrolls figures offer the most timely and thorough snapshot of the economy, these is a measure of American Middle Class & this figure translates to people withwho--have money and are ready to spend. American economy is highly fueled by consumerism with about 75% of GDP driven by consumers; the higher the Non-Farm Payrolls number the more the consumers.

Average Work WeekThe Work Week, also referred to as hours worked, is an often under rated fundamental economic indicator on the establishment survey. The average No. of the hours worked by employees on Non Farm Payrolls, NFP is an important market data the is used as a determinant of both industrial production & personal income of woker within the economy in any given month.

Average Hourly EarningsThe last fundamental indicator from the establishment survey which's worthy of close a inspection is the Average Hourly Earnings, which is crucial for two reasons. Alongside total man-hours, the average earnings figure gives us a good indication of personal income growth during the month. Second, the earnings figures are closely watched during periods of strong and stellar economic growth for evidence of increasing wage pressures.

Unemployment RateUnemployment Rate - % of employable people actively searching for work, out of the overall total number of employable people determined in a monthly survey by the Bureau of Labor Statistics.

An unemployment rate of about 4% - 6% is regarded healthy. Lower rates are seen as inflationarydue to the upward pressure on salaries; higher rates threaten a decrease in consumer spending.

Jobless ClaimsJobless Claims - A weekly compilation report of the number of individuals who signed up & filed for unemployment insurance for the first time. This fundamental analysis indicator, and more importantly, its four-week MA, illustrates the employment situation in the labor market.

Jobless claims are an easy way to gauge the strength of the job market. The fewer people signing up for the unemployment benefits, the more the people having jobs, & that tells traders a great deal about the economy.

Nearly every job comes with an income that gives a household the spending power. Spending greases the wheels of the economy and keeps the economy growing, so the stronger the employment hiring, the healthier the economy.

By tracking the number of the jobless claims, investors can gain an insight of how the job market is doing. If wage inflation threatens, there's a good chance that interest rates will be raised, bond & stock prices will fall, and the only investors who will be in a good and-happy mood will be those ones that tracked jobless claims and adjusted their trading portfolios to anticipate these events. The lower the number of unemployment claims, the stronger the job hiring is, & vice versa.

Gross Domestic Product - (GDP)

• Importance: !!!
• Source: Bureau of Economic Analysis, U.S. Department of Commerce.
• News Report Release/Announcement Time: Third or fourth week of the month at 8:30 EST for the prior quarter

Gross Domestic Product (GDP) is the broadest measure of the economic activity. Annualized quarterly percent changes in the GDP reflect the growth rate of the overall total economic output. These figures can be quite volatile from quarter to quarter. Inventory & net export swings in particular can produce significant volatility in the GDP. The final sales figure, which excludes inventories, sometimes can be helpful in identifying under-lying growth trends as the inventories represent unsold goods and products, and a large inventory increase will boost GDP but may be indicative of weakness rather than momentum. The broad components of GDP are: consumption, investment, net exports, government purchases, and inventories. Consumption is by far the biggest and largest component, totaling 2 thirds of the GDP.

Retail Sales report

• Importance: !!!
• Source: The Census Bureau of the Department of Commerce.
• News Data Report Release Time: 8:30 EST around the 13th of the month (data for 1 month prior).

The retail sales report is a measure of the overall total receipts of the retail stores. The changes in the retail sales are widely followed as the most timely trading indicator of broad consumer spending patterns. Retail sales are often viewed ex-autos, because the auto sales numbers can vary sharply from month to month. It is also important to keep a close watch on the gas and food components, because changes in these 2 reports are often a result of price changes rather than shifting consumer demand.

Retail sales can be quite volatile and the advance reports are subject to rather big revisions. Retail sales do not include spending on services, which makes up over half of the total consumption. Total personal consumption isn't available until the personal income and consumption reports are released, typically 2 weeks after the retail sales data.

Housing Starts & Building Permits

• Importance: !!!
• Source: The Census Bureau of the Department of Commerce
• News Report Announcement Time: 8:30 EST around the 16th of the month (data for 1 month prior).

Housing Starts are a measure of the number of residential units on which construction has begun and started each month. A start in construction is defined as the beginning of excavation of the foundation for a building and is comprised primarily of residential housing. Building permits are permits taken out in order to allow excavation. An increase in building permits & starts mostly occurs a few months after a reduction in the mortgage rates. Permits lead the starts, but permits aren't required in all regions of the country, and the level of permits therefore will tend to be less than the level of the starts over time.

Existing Home Sales

• Importance: !!
• Source: National Association of Realtors.
• News Report Announcement Time: 10:00 EST around the 25th of the month (data for the month prior).

The name speaks for itself - this report provides a measure of the level of sales of existing home sales. The report is regarded a decent indicator of the activity in the housing sector. Housing starts precede this report each month, but starts are a supply rather than a demand side fundamental indicator. Existing home sales precede the other key demand-side fundamental indicators of housing - new home and houses sales - thus boosting the visibility of the report. Sales are highly dependent on the mortgage rates, and tends to react with a few months lag to changes in rates. Sales are also determined by the level of pent-up demand for housing - immediately after recession, sales are typically quite strong due to the demand that accumulated through and during the recession.

Chicago PMI

• Importance: !!!
• Source: Chicago Purchasing Managers Association.
• News Report Release/Announcement Time: Last business day of the month at 10:00 EST for the current month.

Philadelphia & Chicago surveys are more closely watched due to and because of their timeliness and the fact that these regions represent a reasonable cross section of national manufacturing activities.

Trade BalanceThis is statement of a country's trade in goods (merchandise) & services. It covers products such as manufactured goods, raw materials & agricultural goods, & also travel and transportation.

It is the difference between the value of the goods and services that a country exports & the value of the goods and services that it imports.

If a country's exports exceed its imports, it has got a trade surplus & the balance is said to be positive. If imports exceed exports, the country has a deficit and its trade balance is said to be negative.

A positive or negative balance may simply reflect a change in the relative cost of the domestic products compared & analyzed with the international prices. For industries which rely heavily on exports, such as the auto sector, a positive balance might reflect a higher international demand, which can mean more jobs in that industry.

Purchasing Managers Index PMIPurchasing Managers Index (PMI) - National Association of Purchasing Managers (NAPM), now called the Institute for Supply Management, releases a monthly composite index of the national manufacturing conditions, constructed from info on new orders, production, supplier delivery times, backlogs, inventories, prices, employment, export orders, and import orders.

It is divided into manufacturing & non-manufacturing sub-indices.

Producer Price Index (PPI)Producer Price Index (PPI) - PPI is a measure of the average price level for a fixed basket of capital and consumer goods paid by producers.

The PPI gauges price changes in the manufacturing industry sector. It estimates average changes in selling prices received by the domestic producers in the manufacturing, mining, agriculture, & electric utility industries for their output.

Inflation at this producer level often gets passed through to the Consumer Price Index (CPI).

The relationship between inflation and interest rates is the key to understanding how information like the PPI influence the markets & your investments.

Philadelphia Fed SurveyPhiladelphia Fed Survey - A composite diffusion index of the manufacturing conditions within the Philadelphia Fed Reserve district.

This survey is widely followed as an indicator of manufacturing sector trends since it is correlated with the ISM survey and the index of industrial production.

The Philly Fed survey gives a detailed and thorough look at the manufacturing industry sector, how busy it is & where things are headed. Because manufacturing is a major sector of the overall economy, this report has got a big influence on the currency prices behavior.

Some of the Philly Fed sub-indexes also provide insight on commodity prices & other clues on inflation.

Personal IncomePersonal Income - Personal income is the dollar amount of the income received from all sources by individuals. Personal outlays include consumer purchases of durable and non-durable goods & services.

The income and outlays data are another handy way to rate the strength of the economy & where it's headed. Income gives households the power to spend and/or save.

Spending greases the wheels of the economy and keeps it growing. The consumption (outlays) part of the report is even more directly tied to the economy, which we know usually influence how the markets perform.

Consumer spending contributes & accounts for a two thirds of the overall economy, so if you know what consumers are up to, you'll have a pretty good handle on where the economy is headed. Needless to say, that is a big advantage for investors.

New home salesNew home sales - The number of new constructed homes with a committed sale during that month. The level of new home sales reflects housing price trends.

This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling comfortable and confident in their financial position to buy a home.

Furthermore, this narrow piece of information has got a powerful multiplier effect through the economy, & therefore across the markets and your investments.

By tracking economic information such as new home sales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio.

Each time the construction of a new home begins, it translates to additional/more construction jobs, and income that will be pumped back into the economy.

Once the home is sold, it generates revenues for the home builder & the realtor. Trends in the new home sales information carry valuable clues for the stocks of construction builders, mortgage lenders and furnishings companies.

Money supplyMoney supply - The monetary aggregates are alternative measures of the money supply by degree of liquidity. Changes in the monetary aggregates indicate the thrust of monetary policy & also the outlook for economic activity & inflationary pressures.

The monetary aggregates (know individually as M1, M2 and M3) used to be all the rage a couple of years back because the info revealed the Fed's (tight or loose) hold on the credit conditions in the economy.

The Fed issues target ranges for money supply growth. In the past, if actual growth moved outside of those ranges it often was a prelude to an interest rate move from the Fed.

Today, monetary policy is understood more clearly by the level of the federal funds rate. Money supply fell out of fashion in the nineties, due to a variety of changes in the financial system & the way the Federal Reserve conducts monetary policy.

Fed is working on some new estimates of money supply, and given the way economic indicators ebb & flow in popularity, do not be surprised if the monetary aggregates make a comeback in the future.

International TradeMeasures the difference between imports & exports of both tangible goods and services. The level of the international trade balance, & also changes in exports and imports, reflect trends in foreign trade.

Changes in the level of imports and exports, along with the difference between the two (the balance) are a valuable gauge of economic trends here and abroad. Furthermore, the info can directly impact all financial trading markets, but especially the fx value of the dollar.

Imports indicate demand for foreign goods and services here & the USA exports show the demand for US goods in overseas countries. The dollar can be particularly sensitive to changes in the deficit run by USA, since this imbalance creates greater demand for foreign currencies.

This report provides a breakdown of USA trade with major countries as well, so it can be instructive for traders who are interested in diversifying globally. For example, a trend of accelerating exports to a specified country may signal economic momentum and investment opportunities in that country.

Industrial production & capacity utilizationIndustrial production and capacity utilization - Index of the Industrial Production is a chain weight measure of the physical output of the nation's factories, mines & utilities.

The capacity utilization rate reflects the usage of available resources. Investors want to keep their tabs on the pulse of the economy because it usually dictates how various types of investments will perform.

Industrial production show how much the factories, mines and utilities are producing. Since the manufacturing industry sector accounts for one-quarter of the overall economy, this report has got a big influence on currency price behavior.

The capacity utilization rate provides an estimate of how much factory capacity is in use. If the utilization rate gets to high (above 85 %) it can lead to inflationary bottlenecks in the production.

The Federal Reserve watches this report closely & sets interest rate policy on the basis of whether if the production constraints are threatening to cause inflationary pressures.

Housing startsHousing starts - Housing starts measure of the number of residential units on which construction is begun each month. Home builders do not start a house unless they're fairly confident it will sell upon or before its competition.

Changes in the rate of housing starts tell us a lot about demand for homes & the overall outlook for the construction industry. Furthermore, each time a new house is started, construction employment rises & income will be pumped back into the economy.

Construction SpendingConstruction Spending - Dollar value of the new construction activity on the residential, non-residential and public projects. Data are available in nominal & real (inflation-adjusted) dollars.

Businesses only put money in to construction of new factories or offices when they are confident that the demand is strong enough to justify the extension.

The same goes for the individuals making the investment in a home. That's why construction spending is a good fundamental indicator of the overall economy's strength.

Consumer Confidence IndexConsumer Confidence Index - Survey of consumer attitudes concerning both the current situation as well as their expectations in regards to the economic conditions carried out by The Conference Board. Five thousand consumers across the country are surveyed each month.

The level of consumer confidence is directly related to the strength of consumer spending. Consumer spending contributes & accounts for two-thirds of the overall economy, so the markets are always dying to know what consumers are upto & how they might behave in the near future.

The more confident consumers are about the economy & their own personal finances, the more likely they're to spend.

With this in mind, it is easy to see how the index of the consumer attitudes gives insight to the direction of the economy. Changes in consumer confidence and retail sales do not move in tandem month by month.

Consumer Price Index (CPI)Consumer Price Index (CPI) - Measure of the average price level of a fixed basket of goods & services purchased by consumers. Monthly changes in the CPI represents the rate of inflation.

CPI is the most followed fundamental indicator of inflation in the US. Inflation is a general increase in the price of goods & services. The relationship between inflation and interest rates is the key to understanding how data like the CPI influence the markets.

By tracking the trends in inflation, whether high or low, rising or falling, traders can anticipate how various types of investments will perform.

Durable goods orderThe durable goods orders reflect the new orders placed with domestic manufacturers for immediate and future delivery of factory hardwoods. Orders for durable goods show how busy factories will be in the months to come, as the manufacturers work to fill those orders. The data not only provides insight to demand for things like refrigerators & cars, but also biz investment going forward.

If companies commit to spending more on equipment and other capital, they're obviously experiencing sustainable growth in their biz. Increased expenditures on investment goods set the stage for greater productive capacity in the country & reduce the prospects for inflation. It tells investors what to expect from the manufacturing sector, a major component of the economy and hence a major factor of influence on their investments.

Existing home salesExisting home sales - Number of previously constructed homes with a closed sale during the month. Also known as home resales) are a large share of the market than new homes & indicate housing price trends. This provides a measure of not only the demand for housing, but the economic momentum.

People have to be feeling pretty comfortable and confident in their financial position to buy a house. Even though home resales do not always create new output, once the home is sold, it generates revenues for the realtor.

Gross Domestic Product - GDPThe sum of all goods & services produced either by domestic or foreign companies. GDP indicates the pace at which a country's economy is growing (or shrinking) and is considered the broadest indicator of economic output & growth. Investors need to closely keep tabs on the economy because it usually dictates how their investments will perform.

GDP report contains a treasure-trove of information which not only paints a picture of the overall economy, but tells traders about important trends within the big picture. GDP components like consumer spending, business and residential investments & price (inflation) indexes spot light the economy's under-currents, which can translate to investment opportunities and guidance in managing a portfolio.

Retail Prices IndexRetail Prices Index - Retail Price Index is the United Kingdom's principal measure of consumer price inflation. It is defined as an average measure of change in the prices of goods and services brought for the purpose of consumption by the vast majority of households in the United Kingdom.

It is complied and published monthly. Once published, it's never revised. Retail Price Index includes date on food & drink, tobacco, housing, household goods and services, personal goods & services, transport fares, motoring costs, clothing and leisure goods & services.

Measures of inflation are vital tools for economists, business and government. The Bank of England's Monetary Policy Committee sets UK interest rates on the basis of a target figure for inflation rate set by Chancellor of the Exchequer.

Wage agreements, pensions & change in the benefit levels are most often linked directly to Retail Price Index. Utility regulators impose restrictions on the price movements based on the Retail Price Index.

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