Fundamental analysis

Primary Jobless Claims

What is it:: This indicator shows how many people became unemployed last month.

Why it should be followed: The fewer new applications, the more powerful a country’s economy is and the more stable the labour market. High employment level leads to higher consumer spending and higher GDP data. Therefore, if the actual value of Primary Jobless Claims in the economic calendar is lower than the forecast, the USD/JPY price is likely to fall.

When is the data published: weekly, on Thursdays.

Interest rate decision

What is it: Central banks regulate the rate at which they issue loans to the rest of the national commercial banks. It depends on the rate level how profitable it will be for foreign investors to invest in the national currency.

Why it should be followed: Interest rate decision shows how the economy has changed over time, as well as how attractive and strong the currency will be (e.g. USD – for the United States).

When is the data published: each quarter by the eight major central banks (US Federal Reserve, European Central Bank, Bank of England, Japan, Switzerland, England, Australia and New Zealand).

Money Supply

What is it: Money Supply measures the amount that currently available for spending in a country’s economy.

Why it should be followed: It’s the leading indicator that allows investors to predict the level of potential inflation and allows traders to get an idea about further Central Bank policy. The more money available, the more confident the country is and the better for the national currency.

When data is published: In the United States – every Thursday.

Nonfarm Payrolls (NFP)

What is it: This major report shows how many jobs were created within US enterprises. The results are split into industry groups and do not include vacancies from the agricultural sector.

Why it should be followed: Higher employment rates may indicate national companies’ expansion – potentially impacting on the stock market. Moreover, an increase in potential consumer spending would lead to economic growth. Nonfarm Payrolls report about both the working time spent and the average rate of wages: a growth can lead to higher interest rates. If data is better than the forecast, it often pushes the EUR/USD chart down.

When is the data published: on the last Friday of each month.

Personal income

What is it: Measures the total income, received by all country citizens and consists of wages, interest, dividends and annuities.

Why it should be followed: This is a coincident indicator that shows the strength of consumers’ demand (how much money the customers have). The more of them, the better for the economy: when Personal income grows, people are more likely to spend and, thus, return it to the economy.

When data is published: Monthly, after the 20th.

Producer Price Index

What is it: Measures changes of the price at which national producers sell their products. The report covers all inner production, excluding imports.

Why it should be followed: It is a signal for potential inflation and changes in the economic policy. It is assumed that any increase in producer costs invariably leads to higher prices for consumers. As the cost of goods and services increases, the standard of living will fall, and therefore this report can be used as a leading indicator of inflation.

When data is published: monthly, the week after NFP.

Retail sales

What is it: The indicator measures changes in the retail goods value, including food, clothing and vehicles.

Why it should be followed: This is a leading indicator. Significant growth in retail sales will bring more money into the country’s economy, increase the risk of inflation and the likelihood of the Central Bank intervention. The decline in retail sales may indicate an approaching recession.

When data is published: the 13th of each month.

Trade Balance

What is it: That is the difference between the national exports and imports volume. When the exports’ value far exceeds the imports’ value, it’s a positive trade balance. And vice versa: when the imports value is significantly higher than the exports value, a trade deficit arises.

Why it should be followed: the report serves as a lagging indicator of the country’s economy. In addition, countries that have a significant trade deficit can accumulate large amounts of debt, which, in turn, leads to the devaluation of the national currency.

When data is published: the 19th of each month.

Unemployment Rate

What is it: Data shows the number of unemployed people in the country for the last month. The indicator itself is calculated by dividing the number of unemployed by the total number of capable citizens (excluding pensioners, children, etc).

Why it should be followed: A lagging indicator that triggers a “domino effect”. The unemployed are likely to cut costs – i.e. the amount of money entering the country. This Rate can lead to lower GDP and can increase the likelihood of a recession. The reverse is also true: low unemployment can be seen as a sign of economic growth.

When data is published: on the first Thursday of every month, simultaneously with NFP.