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

The forthcoming Economic Data Reports are the most closely scrutinized announcements within the Forex and XAUUSD trading arenas. Upon their release, these reports invariably inject market volatility, leading to discernible pip movements in currency pairs and other instruments like Gold. The magnitude of the resulting pip movement will correlate directly with the volatility rating assigned to each news event: news headlines flagged with three exclamation marks are known to generate the highest volatility, followed by those marked with two, and then one exclamation mark.

Most traders focus on news with two or three exclamation marks. These reports usually trigger moves of 30 to 100 pips right after they're released.

The news that traders watch is below, and reports with the data and numbers can be found on a Financial Economic Calendar.

Employment Report

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

The employment data report survey gives you the Non-Farm Payrolls, Average Work Week, Average Hourly Earnings, and more. Both surveys cover the same payroll period.

Non-Farm Payrolls The key data in the employment report, especially from the establishment survey, is Non-Farm Payrolls. As the name suggests, it counts workers on payrolls at non-farm businesses. Monthly shifts in these numbers can swing a lot, sometimes by over 200,000 from one month to the next. Non-Farm Payrolls, or NFP, give the quickest and most detailed view of the economy. This number reflects the American middle class, people with cash who are set to spend. The U.S. economy runs mostly on consumer spending, which makes up about 75% of GDP. Higher Non-Farm Payrolls mean more buyers in the market.

Average Work Week The Work Week, which is also known as hours worked, is a sign that is often not given enough attention in the business survey. The average number of hours that employees work on Non-Farm Payrolls, which is also known as NFP, is a key thing that decides both the overall level of industrial production and how much money employees make in any given month.

Average Hourly EarningsThe final item from the jobs report worth a look is average hourly earnings. It matters for two reasons. First, with total work hours, it shows monthly income gains. Second, in times of strong growth, people watch it for signs of wage hikes and rising costs.

The unemployment rate represents the percentage of employable individuals actively seeking work out of the total eligible workforce. This figure is typically determined through monthly surveys conducted by the Bureau of Labor Statistics.

An unemployment rate of 4% to 6% is normal. Low rates push up wages and cause inflation. High rates cut spending.

Jobless ClaimsJobless Claims - A weekly compilation data report of the No. of individuals who filed for unemployment insurance for the first time. This fundamental fundamental indicator, & more importantly, its four-week MA, illustrates the employment situation in the labor market.

Unemployment claims provide a straightforward barometer for assessing the strength of the employment sector. A decrease in new applicants for joblessness benefits signifies more individuals are employed, which conveys significant economic information to market participants.

Employment generates income that fuels household spending, which in turn drives economic growth. A robust job market contributes to stronger consumer activity, fostering a healthier overall economic environment.

By tracking the number of jobless claims, traders can gain an idea of how the job market is doing. If wage inflation threatens, it is a good bet that the interest rates will be raised, bond & stock prices will fall, and the only traders that will be in a happy mood will be the ones who tracked the jobless claims and adjusted their trade portfolios to anticipate these events. The lower the No. of unemployment claims, the stronger the job hiring is, and vice versa.

Gross Domestic Product - (GDP)

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

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

Retail Sales report

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

The retail sales report is an estimate of the overall total receipts of retail stores. The changes in the 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's also key to keep a close watch on the gas and food components, because changes in these two reports are often a result of price changes rather than changing consumer demand.

Retail sales often swing wildly. Early reports face big changes later. These figures skip service spending, which covers more than half of all consumer outlays. Full personal spending data comes later in the income and consumption reports. That release happens about two weeks after retail sales info.

Housing Starts & Building Permits

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

Housing Starts track new residential builds that begin each month. A start means digging the foundation for homes mostly. Building permits allow that digging to happen. Starts and permits often rise a few months after mortgage rates drop. Permits come before starts. But not every area needs permits. So over time, permit numbers stay lower than start numbers.

Existing Home Sales

  • Importance: !!
  • Source: National Association of Realtors.
  • News Data Report Announcement Time: 10:00 EST around the 2fifth of the month (data for the month prior).

The title tells you what it is - this report gives an idea of how many previously owned homes were sold. People think of this report as a reasonable way to see how busy things are in the housing market. Housing numbers come out before this report each month, but those numbers show what's available, not how much people want to buy. Existing home sales come before the other main ways of seeing how much people want to buy houses - specifically, new home sales - making this report more important. Sales depend a lot on mortgage rates and usually respond to rate changes after a few months. Sales also depend on how much people have been waiting to buy houses: right after a recession, sales are usually high because of the demand that has grown during the recession.

Chicago PMI

  • Importance: !!!
  • Source: Chicago Purchasing Managers Association.
  • News Data Report Announcement Time: The last business day of the month at 10 EST for the current month.

The surveys from Philadelphia and Chicago are more closely monitored due to their timely nature and the representation of a practical cross-section of national manufacturing activities they provide.

The trade balance reflects a country's trade activity involving goods (merchandise) and services. It includes items like manufactured goods, raw materials, agricultural products, as well as travel and transportation services.

It's the gap between how much money a country makes from selling things and how much money it spends on buying things.

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 got a deficit and its trade balance is said to be negative.

A positive or negative balance might just show a change in how much local products cost compared to international prices. For industries like cars that export a lot, a positive balance could mean more international demand, creating more jobs in that industry.

Purchasing Managers Index (PMI)Purchasing Managers Index PMI - The group that used to be called the National Association of Purchasing Managers (NAPM), now called the Institute for Supply Management, puts out a monthly number that shows how manufacturing is doing across the country, using information about new orders, production, how fast suppliers deliver, backlogs, inventories, prices, jobs, export orders, and import orders.

It's divided into manufacturing & non-manufacturing sub-indices.

The Producer Price Index (PPI) measures the average price levels of a fixed basket of capital and consumer goods paid by producers, serving as an indicator for economic conditions.

The PPI shows how prices change in the manufacturing part of the economy. It measures how much selling prices change for local manufacturers in areas like manufacturing, mining, farming, and power companies.

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

How inflation and interest rates relate is key to knowing how news like the PPI affects the markets and the money you put into them.

Philadelphia Fed Survey - This is a combined index of manufacturing factors and conditions in the Philadelphia Federal Reserve district.

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

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

Certain ancillary indices from the Philly Fed report also yield directional clues regarding commodity valuations and broader inflationary indicators.

Personal income is the total monetary income received from various sources by individuals. Personal outlays encompass expenditures on durable goods, non-durable goods, and services.

The income & outlays info are another handy way to rate the power of the economy and where it is headed. Income provides households the power to spend and/or save.

Spending drives economic growth. The consumption data in this report links directly to the economy. That often shapes market performance.

Since consumer expenditure constitutes two-thirds of the total economic activity, possessing insight into consumer behavior grants a significant advantage in anticipating the trajectory of the broader economic environment. This knowledge, naturally, presents a considerable edge for traders.

New Home Sales: This metric quantifies the number of newly constructed residences that have secured a committed sale within the reported month, offering insight into the trajectory of the housing sector.

The MACD technical indicator is classified as a leading indicator because it produces gold signals that precede the actual price movement, unlike lagging indicators which report price movements after they have already occurred.

This small fact spreads big effects through the economy. It hits markets and your investments hard.

By tracking economic info like new home sales, investors can gain specific investment ideas & also broad guidance for managing a portfolio.

Each time a new home is being built, it leads to more jobs in construction, along with more money that will be put back into the economy.

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

Money supply refers to these monetary aggregates, which serve as various indicators of the liquidity levels. Fluctuations in these aggregate values demonstrate the impact of monetary policy and provide insights into the predictions regarding economic performance and inflationary pressures.

These money numbers (called M1, M2, and M3) used to be very popular years ago because they showed how much control the Fed had over 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 precursor to an interest rate move by the Fed.

Now, the federal funds rate best shows monetary policy goals. Talk of money supply faded in the 1990s. Changes in finance and Fed methods made it less useful.

The Fed is creating new ways to measure money supply. Economic data shifts in focus over time, so these aggregates may return soon.

International trade tracks the gap between imports and exports of goods and services. The trade balance level, plus shifts in exports and imports, reveal foreign trade patterns.

Shifts in imports and exports show economic shifts at home and away. The gap between them tracks balance well. This info hits all finance markets hard. It shakes the dollar's forex value most.

Imports show how much we want goods and services from other countries, while US exports show how much other countries want US goods. The dollar's value can change a lot when the United States has a deficit, because this makes people want more foreign money.

This report provides an overview of US trade with key nations, making it valuable for investors interested in global diversification. For example, a trend indicating rising exports to a specific country may signify economic robustness and potential investment prospects within that nation.

Industrial production and capacity utilization represent critical measures of economic activity. The Index of Industrial Production, a chain-weighted metric, gauges the physical output from factories, mines, and utilities nationwide.

The capacity utilization rate reflects how efficiently available resources are being used. Monitoring this metric helps traders anticipate investment performance in different economic conditions.

Industrial production statistics reveal the total output volume generated by factories, mines, and utility providers. Given that the manufacturing sector constitutes approximately one-quarter of the total economic activity, this report carries substantial weight in influencing currency price movements.

The utilization rate measures factory activity levels: if it exceeds 85%, inflationary bottlenecks in production may arise due to overcapacity.

The Federal Reserve closely monitors this report to adjust interest rate policies based on factors that could contribute to inflationary pressure.

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

Changes in the numbers for housing tell us much about the need for homes & what to expect for the construction business overall. Also, each time building starts on a new house, more people are hired for construction and money goes back into the economy.

Construction spending refers to the monetary value of new construction projects across residential, non-residential, and public sectors. Data is provided in both nominal terms and inflation-adjusted (real/live) values.

Businesses will only invest money in building new factories or offices if they are confident that there is enough demand to support the growth.

It's the same idea when people buy a house. That's why construction spending is a good sign of how strong the overall economy is.

Consumer Confidence Index: This index represents the Survey of consumer attitudes concerning both the present circumstances and their forward-looking expectations regarding economic conditions, compiled by The Conference Board. Five thousand consumers nationwide are polled every month.

The pace of consumer spending is directly correlated with the level of consumer confidence. Since two-thirds of the total economy is made up of consumer spending, the markets are constantly curious about what consumers are doing and how they may or may not act in the coming years.

Increased consumer assurance regarding the broader economy and their own stable financial status leads directly to a higher propensity for spending.

Keeping this context in mind, it becomes apparent how this measure of consumer sentiment offers valuable perception into the overall economic condition. Fluctuations in consumer confidence and retail sales do not align perfectly month-to-month.

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

CPI is the main thing people look at to understand inflation in the United States. Inflation means that the prices of things are going up in general. The link between inflation and interest rates is key to knowing how things like the CPI affect the markets.

Investors may predict how different kinds of investments will perform by monitoring market trends in inflation, regardless of whether it is high or low, increasing or decreasing.

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

If businesses spend more on machines and other big items, it means their business is growing steadily. When more money is spent on things that help make products, the country can make more things, and inflation is less likely. This informs traders what to expect from manufacturing, which is a big part of the economy and greatly affects their investments.

Existing home sales - The amount of homes that were built before that have a completed sale during the month. These are also called home resales) and make up a bigger part of the market than new homes, showing housing market trends. This measures both how much people want homes and the strength of the economy.

Buying a house often requires individuals to feel financially secure and confident. While resold homes don't always contribute new output, they do generate revenue for brokers or agents once sold.

Gross Domestic Product = GDP: This metric represents the total value of all goods and services produced by entities operating within a nation, irrespective of whether they are domestic or foreign-owned. GDP serves as the most comprehensive measure of a nation's economic output and pace of expansion (or contraction). Investors must pay close attention to economic indicators as they generally foreshadow the performance trajectory of their holdings.

The GDP report is full of information that not only shows the whole economy, but also tells traders about important patterns within the big picture. GDP parts such as what people spend, business and home investments, and price (inflation) numbers highlight the economy's hidden trends, which can lead to chances to invest and help in handling a portfolio.

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

It is put together and made available every month. After it is made public, it never gets changed. The Retail Price Index has details about food and drinks, tobacco products, housing costs, items for the home, personal products and services, travel costs, car expenses, clothing, and entertainment.

Measures of inflation are vital tools for economists, business and government. 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 often linked directly to the Retail Price Index. Utility regulators impose restrictions on price movements based on the Retail Price Index.

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