- non-farm payrolls: published on the first Friday of each month, this data tells us how many new paychecks have been issued in the non-agricultural sector; practically it expresses how many jobs have been created or lost;
- unemployment rate: it is the ratio (expressed as a percentage) between the number of unemployed and the total labor force;
- average number of hours worked;
- average hourly earnings.
Fundamental Analysis in Forex: How to Get Started
In reality, although this should be true in everyday practice, other fundamental evaluations must be made as macroeconomic data from a specific geographical area could indirectly have a decisive impact on another economic area (for reasons of commercial interdependence), without evaluating the correlations between the currencies themselves, investor sentiment, risk perception, and current geo-political factors. Therefore, the appreciation or depreciation of one currency in terms of another does not simply result from investors' reactions to a particular macroeconomic data point (if good, the currency rises; if bad, the currency falls). An evaluation in such simplistic terms risks opting for trading solutions that are not necessarily successful in the short term.
A Forex Trader will only have to pay attention to a few relevant macroeconomic data, also known as market movers for their ability to enormously influence the market. For operational purposes, it is not very convenient to follow every single macro data point to enter a position in the market. A Forex Trader will essentially be a technical analyst, but will have to at least follow the market's reaction after the publication of some fundamental market movers. These are macro data capable of overturning the main direction of monetary and/or fiscal policy of an economic area with strong consequences on the appreciation/depreciation of the currency in the medium term, as we will have enormous capital inflows or outflows that will impact the value of the currency itself.
There is a calendar of macroeconomic data published every day of every week of every month of the year. Before the data is communicated, investors have preliminary news on the timing, the previous value, and the expectation of financial analysts (also known as the consensus estimate). One of the best websites that provide this fundamental news is undoubtedly www.forexfactory.com. Completely in English but easy to understand, it provides the data value in real-time, helping less experienced individuals to assess the probability that the data may impact the currency concerned to a certain extent. Furthermore, it proceeds with an instant revisitation of the previous value, in case there is an upward or downward modification of the value.
The main market movers are published in the United States. The most anticipated is undoubtedly the one related to the level of the interest rate that the Federal Reserve (FED), i.e., the American Central Bank, deems appropriate for the US economy. The FED communicates its monetary policy decisions 8 times a year following the meeting of the executive committee, i.e., the FOMC (Federal Open Market Committee), which represents the operational arm. The decision on interest rates is equally followed in the other main currency areas of the planet: Europe, Japan, Great Britain, Canada, Switzerland, and Australia. In reality, with the advent of China as the second world economic power, the decisions of the Chinese Central Bank (PBOC, People's Bank of China) are also closely followed, as they have the effect of making their monetary policy more accommodative (rate cut, expansionary monetary policy) or oriented to avoid overheating of the local economy (rate hike, restrictive monetary policy). In Europe, monetary policy is entrusted to the European Central Bank (ECB); in Great Britain to the Bank of England (BoE); in Japan to the Bank of Japan (BoJ); in Canada to the Bank of Canada (BoC); in Switzerland to the Swiss National Bank (SNB); in Australia to the Royal Bank of Australia (RBA).
Another closely followed market mover by investors is the employment report in the United States. The report on the health of the American labor market is divided into four sub-data:
