The Top 5 Reports to Follow This Week

The world of forex trading is ever-changing, so it’s important to keep track of the biggest news and latest developments. We’ve got big reports from all over the world this week. Let’s check ’em out and get a head start on the week, shall we?

China Trade Balance

What in the world is it?

This report gives you a running balance of China’s net exports. When a country’s exports exceed imports, a trade surplus is created. On the other hand, when imports surpass exports, you get a trade deficit. Together with this net figure, China also releases a breakdown of the balance into exports and imports.

Why is it important?

China is like a gentle giant, just looming in the background, coming alive every once in a while to shake the markets. This Wednesday, be prepared to feel the markets quake again as China is due to announce its October trade balance figure.

After witnessing the trade surplus shrink from 28.7 billion USD to 17 billion USD in the past couple of months, economists are finally predicting an uptick to the tune of 9.1 billion USD to arrive at a balance of 26.1 billion USD.

Don’t forget, we’re dealing with one of the world’s largest economies, and this one is expected to make a sizable contribution to overall global growth this year. With that in mind, it’s actually more important to look at the underlying exports and imports data, rather than the net figure.

Exports are expected to decrease from 25.1 billion USD to 26.1 billion USD. On the other hand, forecasts have imports rising from 24.1 billion USD to 26.8 billion USD in October.

Any unexpected jumps in exports or imports may trigger a risk rally as it could be a sign that global economic activity is picking up. The Aussie and the Kiwi will probably gain most from an upside surprise in imports because China is a popular destination for Australia‘s and New Zealand’s goods.

BOE Inflation Report

What in the world is it?

Scheduled on Wednesday, BOE Governor Mervyn King, along with his Monetary Policy Committee buddies, will hold a press conference in London to tell everyone about the current state of inflation in the U.K. It also includes the bank’s outlook for the economy over the following two years.

Why is it important?

The inflation report will provide some clues on whether the BOE is thinking of raising interest rates or expanding its quantitative easing program. With the Fed doing another round of QE and U.K.’s inflation rate stubbornly sitting above the bank’s 2% target, this report will be a very important one. In the event that we do see hints of further QE, then expect the bears to take the pound lower across the board, especially against the euro and the dollar.

Japan’s Core Machinery Orders

What in the world is it?

Japan’s core machinery orders report measures the total change in private-sector manufacturing orders, not including ships and utilities. The report is closely watched by yen bulls and bears because it’s considered a leading indicator for production.

Why is it important?

As an export-reliant economy that is currently dealing with deflation, Japan is sensitive to manufacturing demand. Last month’s report showed an unexpected 10.1% rise for August, which represented the fastest growth since December 2009. According to the report, factory orders rose on improved demand from emerging nations.

On Thursday at 12:50 am GMT (around Wednesday night in the U.S.) the figures for September will be released. While expectation bets are yet to be heard around the fx hood, we know that a figure higher than August’s rise might signal that demand for Japan‘s products is chugging along at a healthy pace.

Australian Employment Report

What in the world is it?

The Australian employment report scheduled for release on Friday measures the net number of jobs that was lost or gained for a certain time period. It also measures how many people are trying to find jobs, but can’t.

Why is it important?

The employment report is very important because it tells us whether the country’s job market is growing or shrinking. The report gives traders a way to gauge the future direction of the economy.

If the labor market is growing, it means that people are making money. If money is being made, then more spending will be done. More spending results in a higher GDP, and GDP my friend, is one of the best measures of an economy’s health.

If you don’t think the report is important, then take a look at how New Zealand’s employment report affected NZD/USD’s price action. It came out better-than-expected, which led to a massive rally in the pair.

During the day of the release, when the report came out better than expected, NZD/USD rose almost 200 pips! That’s huge, considering the pair only moves roughly 100 pips on a daily basis.

Euro zone Flash GDP

What in the world is it?

Another big hit on the charts this week is the euro zone’s flash GDP. Released quarterly, this report measures the value of all goods and services produced by the economy adjusted for inflation. It’s the broadest measure of economic health.

Why is it important?

As part one of the three-part release, the flash GDP has the biggest impact compared to the revised and final GDP releases. Though its impact is generally muted as Germany and France, which account for half the region’s economy, release their GDP figures earlier, market geeks still watch for the report for the region’s overall economic growth.