Eur/usd

Markets 101: What economic data moves markets the most?

Business & Finance

August 4, 2009

By: Jennifer Shotts

Several government agencies track these important data releases each month that give market participants a clue as to the economic health of the country. Some data points will be more heavily weighted depending on the state of the economy at the time of its release, and may create more market volatility if the expectations of the release are not met. Here are the top market moving data releases:

1. Non Farm Payrolls. Released every first Friday of the month by the Bureau of Labor Statistics, the Non-Farm Payrolls release includes the change in number of employed people during the previous month excluding the farming industry, the unemployment rate, and the average of hourly earnings. This lagging indicator is highly regarded as an important signal for overall economic health since consumer spending is highly correlated with labor conditions.

2. GDP. Gross domestic product is the broadest measure of economic activity and the primary gauge of a nation's economic health. It measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. GDP is reported in three ways: advance, preliminary, and final. Since the Advance GDP is released first, it tends to have the most impact on the markets. It is released by the Bureau of Economic Analysis.

3. Fed funds rate/FOMC statement. Released by the Federal Reserve eight times per year, it is the interest rate at which banks lend balances held at the Fed Reserve to other banks overnight, and the paramount factor in currency valuation. Often the rate decision is priced into the market so it tends to be overshadowed by the accompanying FOMC statement which focuses on the future.

4. Retail sales. This is the broadest and earliest look at vital consumer spending data, which accounts for a majority of overall economic activity. The Census Bureau releases this monthly.

5. CPI/PPI. Consumer price index and the producer price index are considered leading indicators of consumer inflation. Both are released by the Department of Labor.

6. ISM non manufacturing/ISM manufacturing. These indexes are leading indicators of the health of the economy too, measuring a survey of 400 businesses each month, a value above 50 indicates industry expansion, below 50 indicates contraction. Released by the Institute for Supply Management.

7. Pending home sales/new home sales/existing home sales. The National Association of Realtors release the data about the U.S. housing market each month. Both new homes sales and existing homes sales can be leading indicators about economic health because a sale triggers a wide-reaching ripple effect.

8. Trade Balance. The Bureau of Economic Analysis releases this data, the difference in value between exported goods and imported goods. A positive number indicates that more goods and services were exported than imported.

9. Long term purchases (TIC). This data released by the Department of the Treasury each month represents the balance of domestic and foreign investment. Demand for domestic securities and currency demand are directly linked because foreigners must buy the domestic currency to purchase the nation's securities, thus it can be a market mover in the US dollar, for example.

Euro and GBP interest rate decisions are missing off the list and should possibly be in at around No4

Thank you WR1

Is there any historical data wich news moved the market for lets say 100 pips 160 pips or less and so on ?

Thanks again for the your answers WR1 ans also thx techmac

Well this leads me to my next questions:

1. How many hours or minutes in advance, the big market makers or big institutuions know about the news ? Cause if they know the news, they also know the directon the price will take... let´s say for example one hour before right?

2. are there any websites wich give some information about in wich direction the news could influence the market (short, long) ? (Statistics or whatever)

3. Is there always a clear candle like friday last week when news come out (no wig --> clear short)

Or are there also moves up 50 Pips, the other second 100 pips down the other second 110 pips up, the other second 100 donw again...

Sorry for my stupid questions but i need to know these things

They have their own experts that are estimating the trends - they don't work on hourly basis but on a long term basis and I realy think that they don't "trade the news"

macidonni:
Thanks again for the your answers WR1 ans also thx techmac

Well this leads me to my next questions:

1. How many hours or minutes in advance, the big market makers or big institutuions know about the news ? Cause if they know the news, they also know the directon the price will take... let´s say for example one hour before right?

2. are there any websites wich give some information about in wich direction the news could influence the market (short, long) ? (Statistics or whatever)

3. Is there always a clear candle like friday last week when news come out (no wig --> clear short)

Or are there also moves up 50 Pips, the other second 100 pips down the other second 110 pips up, the other second 100 donw again...

Sorry for my stupid questions but i need to know these things

Hi

not sure i can answer all the questions

but the public can get the NFP data 3minutes before they are officially released

(if they can find the providers) i once had the link for NFP data 3mins early,

but lost the link as far as i can remember it cost around $300 for a yr

Obama gets the NFP numbers the night before, so any time after he's seen them, i assume they can be sold to the institutions

like wise the UKs (trainee) chancellor gets the UKs GDP figures the day before

possibly the easiest trade i've ever had, was when George Osbourne was interviewed the day before some GDP figures, he smiled (which is very rare for George) - i went long early the next day and the GBP rose 100pips or so

easiest money ever made, so knowing in advance really does make a difference - but it usually costs, and not sure all are available to most of the public unless one has very deep pockets

there are websites (i think) and certainly traders who specifically cover and trade alot news and sell and provide information, although don't follow them, but Google should be able to find more in depth info and a few sites

the best way i find is to build a strategy for each different news event - and as news is always priced in, then usually its also in the charts

Ok thats fine for me Thank you very much guys u helped me a lot !

If any newstraders read this, please pm me

Thank u for all your answers

I would also add the conference call by Mario Draghi, the minutes of the Federal Reserve and the German ZEW index.

Another interesting macroeconomic indicator is the ratio between Ism new orders and Ism inventory. When it drops below 1, the Fed can hardly renounce to a new Quantitative Easing (we are at 1.03 ...)

Only few news events like NFP, the ECB rate and Drgahi speech will do major impact for the EU pair. Others are just OK.