In this post, we
cover the main economic reports using U.S. data as the basis for explaining
what each report measures and how the market views them. The main data reports
of other major national economies essentially mirror the U.S. data reports, but
with some minor differences in calculation methods or reporting. In other
words, the CPI report out of the United Kingdom is looked at the same way as
the CPI report is viewed in the United States - as a measure of consumer-level
inflation. You can apply the descriptions of the main data reports that I
discuss earlier in “Market MovingEconomic Data Reports from United States” to their counterparts from other countries, keeping in mind that
the names of foreign data reports differ slightly.
But plenty of
national data reports don’t have an equivalent in the United States, and others
are followed more closely in local markets and require extra attention. Here, I
will highlight the main data reports of other national economies beyond what we
cover earlier in my previous post.
Eurozone
The main data
reports out of the Eurozone are remarkably similar to those of the United
States. The key difference is that individual European countries report
national economic data, which comes out alongside Eurozone-wide reports from
the European Commission or other pan-European reporting agencies, like the
European Central Bank (ECB). Don’t panic, though – you don’t have to start
monitoring Irish CPI and Dutch retail sales unless you’re trading securities of
those countries.
Because the
Eurozone has a common currency and central bank, the forex market focuses
primarily on Eurozone indicators that cover the entire region, such as Eurozone
industrial production and trade balance. Among individual national reports, the
market concentrates on the key reports from the largest Eurozone economies:
Germany; France; and, to a lesser extent, Italy. Keep a close eye on all the
major data reports coming out of those countries. They can generate sizeable reactions
based on the idea that they're leading indicators ’of Eurozone-wide data or
that they represent a development that’s affecting the region as a whole. If
German industrial production slumps, for example, it may suggest that overall
Eurozone industrial production is set to decline, too.
The only
European reports that may escape your attention due to unusual names are the
principal European confidence indicators, which go by the acronyms of the
groups that put them together. These reports can generate sizeable reactions
when they’re out of line with expectations:
ü
ZEW and GfK sentiment surveys (Relevance: Medium) are two separate consumer confidence gauges issued by private
research firms known by their initials (ZEW and GfK). They’re reported for Germany
and France and on a Eurozone-wide basis.
ü
IFO sentiment surveys (Relevance: Medium) is a corporate sentiment survey that queries businesses across
Germany on current sentiment and how business is expected to develop over the
next six months. The IFO survey is put out by the IFO Institute, a private
think tank in Munich, and covers only Germany.
Japan
When looking at
Japanese data, keep in mind that the Japanese economy is still heavily export
oriented. In addition to following all the usual reports, pay special attention
to industrial production and manufacturing data because of their large role in
the economy. Outside the standard reports to watch, keep an eye on the
following:
ü
Tankan index (Relevance: High): The big
corporate sentiment survey in Japan. The Bank of Japan (BOJ) issues the Tankan
at the beginning of each quarter after surveying some 10,000+ Japanese firms on
their outlook. The Tankan is reported as a diffusion
index, where negative responses are subtracted from positive responses,
resulting in a net reading - the higher the Tankan index, the more optimistic
the outlook. The Tankan survey produces four readings - current conditions and future
outlook from both large manufacturers and large non-manufacturers. The large
all-industry capital expenditures survey is an important gauge of capital
spending and is often the focus of the entire Tankan survey.
ü
Trade balance (Relevance: High): .Japan’s
monthly trade balance is nearly always in surplus. The size of that surplus
carries indications for the health of the export sector as well as potential
political repercussions against excessive JPY weakness when the trade surplus
is seen to be too large.
ü
All-industry and tertiary industry (services) indices (Relevance: Medium): Monthly
sentiment gauges of industrial and service sector firms.
United Kingdom
In addition to
the usual major government-issued data reports, be alert for the following
reports that can frequently trigger sharp reactions in GBP:
ü
Bank of England Minutes (Relevance: High): Released two weeks after each Monetary Policy Committee (MPC)
meeting, they show the voting results for the most recent decision. Market
expectations and GBP are frequently upended when the policy vote shows dissent
(not all members voted for the action) or unanimity.
ü
GfK consumer confidence and Nationwide consumer confidence (Relevance:
Medium): Two separate, monthly, consumer-sentiment
gauges put out by GfK, a UK/European marketing agency, and the Nationwide
Building Society, a UK mortgage lender.
ü
Royal Institution of Chartered Surveyors (RICS) house price balance
(Relevance: Medium): A monthly housing market
survey by the Royal as institution of Chartered Surveyors, showing the
proportion of real-estate agents reporting a rise in housing prices minus those
indicating a decline. The red-hot UK housing market has been a source of
inflationary concern for the Bank of England, so higher RICS balances tend to
support GBP due to the potential for higher interest rates.
ü
CBI distributive trades survey and industrial trends survey
(Relevance: Medium): Two monthly reports put out by
the Confederation of British Industry, a private trade group. The distributive
trades survey is a measure of retail sales, and the industrial trends survey is
a survey of manufacturers’ current and future outlook.
ü
British Retail Consortium (BRC) retail sales monitor and shop price index
(Relevance: Medium): Two monthly reports put out by
the British Retail Consortium, a private trade organization. The retail sales
monitor is another measure of retail sales, and the shop price index measures
inflation at the retail level.
Canada
Canadian data
mirrors U.S. data in many respects, but here are few other important Canadian
indicators to watch:
ü
International securities transactions (Relevance: High): Roughly the equivalent of the U.S. Treasury’s TIC report (see
“Trade and current account balances,” earlier in “Market Moving Economic DataReports from United States”, showing net investment flows into and out of Canada on a monthly basis. High
inflows typically support the CAD, and outflows tend to hurt it.
ü
International merchandise trade (Relevance: Medium): Canada’s' trade balance is especially significant due to the size
of the manufacturing and export sectors.
ü
Ivey purchasing managers index (Relevance: Medium): A key monthly - sentiment gauge of Canadian businesses issued by
the Richard Ivey Business School.
Australia
Australian data
reports exert a strong influence on Aussie, similar in many respects to how UK
data affects the pound. In particular, keep an eye on:
ü
Westpac consumer confidence and National Australia Bank (NAB) business
confidence (Relevance: Medium): Two separate
monthly sentiment gauges put out by two of Australia’s leading banks.
ü
Trade balance (Relevance: Medium): Australia’s
trade balance is critical due to the significance of the export sector and the
relatively small size of the economy, which means that trade deficits tend to
hurt the AUD more than surpluses support it.
Switzerland
Swiss data
reports are generally fewer but fit the standard data bill of fare. Swiss data
tends to have the greatest impact on EUR/CHF, especially if the two economies
are seen to be diverging, either in economic growth or interest rates.
The most
important Swiss data report outside the usual suspects is the KOF Swiss Leading Indicator (Relevance: Medium). The KOF is an
index of six indicators intended to forecast the outlook over the next six to
nine months. The index is calculated by the KOF Technical Institute in Zurich.
New Zealand
New Zealand data
is similarly provocative for the Kiwi, and inflation reports are among the most
significant due to the relatively high level of benchmark interest rates. In
addition to the other main data reports, keep an eye on the following Kiwi
specific data:
ü
Australia New Zealand (ANZ) business New Zealand (NZ) purchasing
managers index (PMI) (Relevance: Medium): A monthly
survey of purchasing managers’ (corporate) sentiment issued by ANZ Banking
Group.
ü
Trade balance (Relevance: High): New
Zealand’s trade balance is also critical due to the relatively small size of
the economy and the importance of exports.
ü
Westpac New Zealand consumer confidence (Relevance: Medium): A monthly consumer sentiment index released by Westpac Banking
Corporation.
