Top 5 Data Releases to Trade

What are the Top 5 data releases to trade?

Every week in the financial markets we see a plethora of economic data releases. Each country releases data at different times and naturally, some releases have more of a market impact than others.

Certain countries data releases have larger market impact than others too. It’s fairly obvious that the US Economic calendar is by far the most important one of all. This is because so many currency pairs are quote against USD and also because the US is the worlds largest economy.

The best way to keep on top of all of these data releases is to use an ‘Economic Calendar’. These calendars plot each market event and give insight to previous figures and also projected figures. You can often sort by Country and expected volatility, which are vital when coming to trade.

Let’s have a run down of the Top 5 date releases to trade, looking at the most volatile and well renowned data releases that every trader should be prepared to learn and trade!

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1 – Non-Farm Payrolls (NFPs)

First in our list of top 5 data releases to trade, we have Non-Farm Payrolls. Historically, Non farm payrolls are one of the most important data releases of the month (Usually NFP data is released on the first Friday of each month) The figure measures the change in the number of people employed within the prior month. This number excludes workers within the farming industry – Hence the name!

If the figure is stronger than expected (more jobs have been created) it is usually Bullish for USD and traders use this as a strong buy indication. If the figure is weaker, this is usually a sell signal for USD. But it’s not only the US Dollar that is affected by this release. Gold (XAUUSD) and US equities are also closely correlated to this number.

This data is released by the US Bureau of Labor Statistics in the US and its always released at 13:30 London, typically an hour before the open of the NY Stock Exchange.

2 – GDP (Gross domestic product)

Number 2 in our list of Top 5 data releases to trade is GDP. Gross domestic product or GDP, is another of the most volatile data releases – especially when figures aren’t near expected estimates. GDP is the measure of total value of goods and services produced by a country, in a specific period. (Basically GDP reveals how ‘healthy’ a country’s economy is!)

If an economy is growing, you should typically see an increase in GDP next quarter. (GDP is measured in quarters in the UK). Vice Versa if the economy is shrinking. If the economy shrinks for 2 quarters in a row – The Country is said to be in ‘Recession’. A term we all know and something that spells bad news for jobs, businesses and workers alike.

Real GDP is slightly different to standard GDP. Real GDP is similar to GDP in the fact that it’s also a measure of a country’s output. However with Real GDP – the figures have been adjusted to allow for inflation.

3 – FOMC (Federal Open Market Committee)

3rd spot in Trading Halo’s list of the top 5 data releases to trade is a biggie – FOMC. FOMC is our favourite economic release on this list. Mainly because of the volatility it can cause before, during and after the data (and in this case, the speech) is released.

The FOMC are part of the Federal Reserve and their main job is to conduct monetary policy (setting of interest rates and management of money supply) for the US Central Bank. There are currently 8 meetings a year, where the members (12 of them) discuss their decisions.

At time of writing – the current Chairman of the FOMC is Jerome Powell. He replaced Janet Yellen who has recently been announced as Treasury Secretary.

The FOMC will attempt to achieve maximum employment and to stabilise prices. It must aim to keep unemployment stable as well as managing inflation. A lot of trading is done during the press conference but a lot of the volatility is seen during the question period after the press conference itself. The Interest Rate decision itself is usually released half an hour before the press conference.

4 – Interest Rate Decisions

Top 5 data releases 4th position goes to good, old-fashioned Interest Rates. FOMC in our last section included the release of the FEDs interest rates decisions – which is one of the most important data releases on our economic calendars. But all Central Banks announce their interest rate decisions and we will take a look at a few examples in this section.

The rates that these Central Banks set interest rates at – have a direct effect on borrowing and spending.

If the bank increases interest rates, borrowing costs rise. Credit cards and loans become more expensive and so does investment.

If the bank lowers interest rates, borrowing then becomes cheaper. This usually encourages people to spend using credit.

Central banks will increase interest rates to slow down an economy that is seen to be over active. Inversely, they will lower interest rates to help stimulate a damp economy!

If rates are hiked by the central bank – the currency of that central bank usually increases in purchasing power.

If rates are cut – the corresponding currency usually decreases in value.

This is the market norm, however it can often depend on what the market was expecting prior to the release.

5 – Retail Sales

Finally, in our list of top 5 data releases to trade we have Retail Sales. Retail sales can be defined as the purchase of goods and services by businesses and consumers alike. They also track demand for these goods and non-durable goods over a set time period. Retail sales numbers are another measurement of how well an economy is performing.

Retail sales are a good indicator of consumer spending as a whole and a high figure (positive figure) is generally going to be positive for the particular country’s currency. For example if the US Census Bureau (who release his data in the US) announce a beat of the previous retail sales figure, then the expectation would be for the value of US Dollar to increase alongside it.

Conversely, if the figure was lower than expected or was just a negative number on the whole, then you would expect to see a weaker USD. Again, this is normal market convention but particular market expectation prior to these releases also have an effect on market reaction.