Economic calendar…..

GDP – GROSS DOMESTIC

PRODUCT

This is one of the most important

indicators for fundamental traders
to watch to provide insight into
the health of a respective
economy in one number. There
are several components that
make up the GDP figure, but the
key is to observe the GDP growth
rate. This is the percentage
increase in GDP from quarter to
quarter.

It informs you exactly how fast a

country's economy is growing.
The growth rate measures
whether the economy is growing
more quickly or more slowly than
the previous quarter. If it
produces less than the previous
quarter, it contracts. If the growth
rate is negative for two
consecutive quarters, this signals
a recession.

This is a larger influencer for the

relating currency. If the GDP data
is strong and beating market
expectations, then the relating
currency will gain in strength.
Investors would want to put their
money within a strong and stable
economy.

If the GDP data is weak and

performing lower than market
expectations, then the relating
currency will weaken in value.
Investors would be wanting to or
already be pulling their money
from an economy which is
slowing or showing no signs of
growth. Due to potential risks of
investment.

INFLATION
 
Inflation is the rate of increase in
prices for goods and services.
Consumer Price Index, referred to
as cost-of-living index, is used to
measure inflation. In terms of the
CPI, it covers data from hundreds
of things we commonly spend
money on, including bread,
fashionable clothing, pints of beer
and other beverages - and tracks
how these prices have changed
over time.

This is important for the currency

as it influences what a central
bank will do with interest rates.
Higher inflation could mean
higher interest rates, which would
see the relating currency
strengthening.  The central bank
may do this to try and cool
inflation. Slow down rising prices.

Lower inflation could mean lower

interest rates, which would see
the relating currency weakening.
The central bank may do this to
try and stimulate people spending
and to create inflation.

LABOR MARKET

There are several forms of labor

market data that should be
watched carefully. First is the
unemployment rate, which is the
percentage of people
unemployed in a specific country.
Next is the jobs added report
such as the US Non-Farm
Payrolls, is the amount of new
jobs added into the economy.

The average earnings number is

the price businesses and the
government pay for labor,
including bonuses. It is also a
leading indicator of consumer
inflation; when businesses pay
more for labor the higher costs
are usually passed on to the
consumer.

All this data is important as it

provides insight into the health of
a countryʼs economy and
business cycle.

As an example, should the

unemployment rate come out
lower at 4.0% versus the market
expectation of 4.3%, the relating
currency will strengthen.

If the unemployment rate is rising

and comes in higher in
comparison to market
expectations, then the relating
currency will weaken.

 
RETAIL SALES
 
Retail sales data provides a
decent gauge of consumer
spending in a countryʼs economy
which typically contributes
greatly to the overall economic
growth. It will help paint a picture
for the measurement of goods
that are sold, the performance of
retail stores and peopleʼs
spending patterns.

As with all mentioned general key

data releases, these are view able
via an economic calendar. It is
crucial for a trader to view the
median expectations for each
piece of data, this will help you
make an informed decision when
looking to enter or exit a trade.
If the number disappoints the
market and is weaker than the
general forecast, this will most
likely result in the relating
currency coming under selling
pressure.

On the other hand, if it is stronger

than expectations, typically the
currency would strengthen,
depending on what data it is.
INTEREST RATE DECISIONS

Central banks will typically have a

rate decision once per month,
where they will either keep rates
unchanged, hike (increase) or cut
rates. Their decision will depend
on how the economy is
performing, looking at factors
such as; labor market, inflation,
growth. These would be taken
into consideration ahead of their
decision.

Interest rate increases tend to

strengthen a respective currency,
attracting more foreign
investment due to the higher
returns. Whereas, cutting interest
rates would likely cause a
currency to weaken, given the
lower return on investment.