The US dollar is the main currency traded all the time. So important related economic data should be observed because it can have an impact on the US dollar.
Every day, traders will observe what economic data will affect the price movement on that day.
There are various data for the economy of the United States (US) that can influence the currency of the US dollar, but which data should be seen?
The following is a list of important US economic data that has a high impact and often has a clear impact on the reaction of the US dollar when it is published.
Federal Funds Rates
This term refers to the interest rate target set by members of the Federal Open Market Committee (FOMC) which determines the lending rate charged to commercial banks.
Changes in interest rates will have a major impact on currency values, and even affect stock market movements.
Consumer Price Index (CPI)
The consumer price index is data that evaluates changes in the prices of goods and services paid by consumers.
This data becomes an important indicator as a gauge of inflation and is observed by the Federal Reserve (Fed) in setting monetary policy.
Employment (NFP)
The employment report is also an important indicator in an economy that will give an overview of the health of the US labor sector.
Published every Friday in the first week of the month, traders will examine the following 3 data readings:
- Non-farm employment change - the total increase in employment in the last month
- Unemployment rate - unemployment rate last month
- Average Hourly Earnings – average hourly earnings paid to employees
Gross Domestic Product (GDP)
Gross Domestic Product (GDP) data measures the total production and consumption of goods and services in the economy.
US GDP data will be reported quarterly and published in 3 versions, namely Advance, Preliminary and Final.
Producer Price Index (PPI)
The producer price index is like the CPI data, but this data measures the change in sales prices by domestic producers for their products.
This data is observed by traders because changes in producer prices can give an idea of the subsequent impact on consumer prices.
Retail Sales
Retail sales data measures the level of consumer spending by calculating the amount of goods sold at a retail business within 1 month.
Although the reading of data is sometimes uncertain due to seasonal factors, it is one of the important indicators of measuring the health of the economy by evaluating it together with GDP data.
Manufacturing & Non-Manufacturing ISM
Monthly reports of surveys for the manufacturing and services sectors published by the Institute for Supply Management (ISM) are important because they provide current information on economic activity.
The survey was conducted on 300 purchasing managers representing 20 different industries across America.
Index readings above 50 points indicate expansion for the sector while below 50 points indicate contraction in the sector.
Surveys on the service sector are prioritized because America is a service-based country and data surveys also give an early signal on the health of the labor sector.
Consumer Confidence
US consumer confidence survey data measures individuals' level of confidence in the current economy.
Two popular reports are published by the Conference Board (CB) and the University of Michigan (UoM).
The survey by CB is on 5,000 households to monitor business conditions in the area of residence, employment availability and also household income for a period of 6 months.
The UoM survey was only for 500 individuals, but because the report by UoM is earlier than CB, the impact is greater on the US dollar currency.
Personal Consumption Expenditures (PCE)
This data published by the Bureau of Economic Analysis (BEA) measures the personal spending of consumers on goods and services in America.
The country's domestic spending provides a significant indication of economic growth and strength.
This data is also one of the important components of measuring inflation to be assessed by the Fed apart from the CPI data.
