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

The following Economic Reports are the most closely followed Economic Report in the Forex & XAUUSD trading market. These reports will cause some market volatility once they're announced, meaning there will be some pip movement in currency pairs and other financial instruments like Gold after these news data reports are announced. The number of pip(point) movement will depend on market volatility rating of each news announcements, news tagged with importance of 3 exclamation marks cause high market volatility, followed by those of 2 exclamation marks and 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 & 100 pip movement once these news data reports are announced.

The news reports followed by traders are shown below & 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 Data Report Announcement Time: First Friday of the month at 8:30 EST, reports info for the previous month

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

Non-Farm PayrollsThe single most important piece of data contained in the employment report generally & the establishment survey particularly is Non Farm Payrolls. As the name implies, Non-Farm Payrolls measure the number of individuals on the payrolls of all the non-agricultural businesses. The monthly changes in payrolls can be quite volatile, occasionally varying by more than 200K from one month to the next. Non-Farm Payrolls figures offer the most timely and detailed snapshot of the economic environment, these is a measure of American Middle Class and this figure translates to people withwho--have money & are ready to spend. American economy is fueled highly 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 technical indicator in the establishment survey. The average number of hours worked by employees on Non-Farm Payrolls is an important determinant of both industrial production and personal income in any given month.

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

Unemployment RateUnemployment Rate - % of employable individuals actively seeking employment, out of the overall total No. of employable people determined in a monthly survey by the Bureau of Labor Statistics.

An unemployment rate of about 4% - 6 % is considered healthy. Lower rates are seen as inflationary due to the upward pressure on salaries; higher rates threaten a decrease in consumer 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 technical indicator, & more importantly, its four-week MA, portrays the employment situation in the labor market.

Jobless claims are an easy way to gauge the power 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 which gives a household spending power. Spending greases the wheels of the economy and keeps it growing, so the stronger the job hiring, the healthier the 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 & 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 figures 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 under-lying 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 biggest 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 13^th 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 is also important to keep a close watch on the gas & food components, because changes in these two reports are often a result of price changes rather than changing consumer demand.

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

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 are a measure of the number of residential units on which construction has started every month. A start in construction is defined as the start of excavation of the foundation for a building & 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 mortgage rates. Permits lead the starts, but permits are not required in all regions of the country, & the level of permits hence tends to be less than the level of the starts over time.

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 name explains itself - this report provides an estimate of the level of sales of existing home sales. The report is considered a decent indicator of the activity in the housing sector. Housing starts precede this report each month, but starts are a supply rather than demand side trading indicator. Existing home sales precede the other key demand side indicators of housing - new houses sales - thus boosting the visibility of this report. Sales are highly dependent on mortgage rates, & 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 strong because of the demand which accumulated through 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.

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

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

It is the difference between the value of the goods and services that a country exports & the value of the goods and services which 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 got 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 domestic products compared & analyzed with the international prices. For industries which rely heavily on exports, such as and like the auto sector, a positive balance might reflect a higher international demand, which can mean more jobs in that sector.

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

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

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

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

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

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

Philadelphia Fed SurveyPhiladelphia Fed Survey - A composite diffusion index of the manufacturing factors and conditions within Philadelphia Fed 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 is 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.

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

Personal IncomePersonal Income - Personal income is the dollar amount of income received from all the sources by individuals. Personal outlays include consumer purchases of durable & 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 greases the wheels of the economy & keeps it growing. The consumption (outlays) part of this report is even more directly tied to the economic environment, which we know normally dictate how the markets perform.

Consumer spending accounts for two thirds of the overall economy, therefore if you know what the consumers are up to, you'll have a pretty good handle on where the economic environment is headed. Needless to say, that is a large advantage for traders.

New home salesNew home sales - number of newly constructed houses with a committed sale during the month. Level of new home sales shows housing market trends.

This provides a measure of not only the demand for housing, but the economic energy. People have to be feeling comfortable and confident in their own financial position to purchase a house.

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

Every time construction of a new house begins, it translates to additional/more construction jobs, & income that will be pumped back in to 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 supplyMoney supply - These monetary aggregates are alternative measures of the money supply by degree of liquidity. Changes in the monetary aggregates indicate the thrust of monetary policy and also the outlook for economic activity and inflationary pressures.

These monetary aggregates (know individually as M1, M2 & M3) used to be all the rage a few years back because the information revealed the Fed's (tight or loose) hold on the credit conditions in the economic environment.

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.

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

Fed is working on some new gauges 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. Level of the international trade balance, and also changes in exports & imports, show trends of the 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 & abroad. Furthermore, the data can directly impact all the financial trading markets, but especially the forex value of the dollar.

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

This report gives a breakdown of US trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For illustration, a trend of accelerating exports to a particular country might signal economic strength & investment opportunities in that country.

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

The capacity utilization rate reflects the usage of available resources. Traders want to keep their fingers on the pulse of the economic situation because it usually dictates how various different types of investments will perform.

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

The capacity utilization/usage rate provides a measure of how much factory capacity is in use. If the utilization rate gets to high (above 85%) it can lead to inflationary bottle-necks in production.

The Federal Reserve watches this report closely & sets interest rate policy on the basis of whether if production factors and aspects 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 are fairly confident it'll sell upon or before its competition.

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

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

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

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

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

Level of consumer confidence is directly proportional to the momentum of consumer spending. Consumer spending accounts for a two thirds of the overall economy, so the markets are always dying to know what consumers are up to & how they may behave in the near future.

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

With this in mind, it is easy to see how this index of consumer attitudes provides an insight to the pulse of the economy. Changes in consumer confidence and retail sales don't 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 and services purchased by consumers. Monthly changes in the CPI represents the rate of inflation.

CPI is the most followed technical indicator of inflation in the United States. Inflation is an overall increase in the price of goods and services. The relationship between inflation & interest rates is the key to understanding how information like the CPI influence the markets.

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

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 companies commit to spending more on equipment & other capital, they're obviously experiencing sustainable growth in their business. Increased expenditures on investment goods set the stage for greater productive capacity in the country and reduce the prospects for inflation. It tells traders what to expect from 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 that month. Also known as home resales) are a large share of the market than new homes & indicate housing market trends. This provides a gauge and measure of not only the demand for housing, but the economic energy.

People have to be feeling pretty comfortable and confident in their financial position to buy a house. Even though home resales don't always create new output, once the home is sold, it gets to generate revenues for the realtor/agent.

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

The GDP report contains a treasure-trove of info which not only paints a picture of the overall economy, but tells traders about important trends within the big picture. GDP constituents like consumer spending, business and residential investments & price (inflation) indexes spot light the economy's undercurrents, which can translate to investment opportunities and guidance in managing 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 the prices of goods & services brought for purpose of consumption by the vast majority of households in UK.

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