While many day traders base the majority of their investment decisions on technical analysis, the fundamental data that is released on a daily basis by governmental agencies in the U.S. and abroad are very often the drivers behind the trends, providing the information on which the technical analysis is based.
The importance of this fundamental data, as well as the economic analysts’ consensus on what to expect in the data releases, equips investors with an additional tool to use in forecasting trends and this should never be overlooked.
Data and other economic news released during the week ahead, one week before the next U.S. Federal Open Market Committee meeting scheduled for Sept 16 – 17, can provide a number of clues as to what interest rates decision the Fed may take.
Some of the important economic data releases to expect from the U.S. include:-
Report on Job Openings for July due at 10:00 on Wednesday, September 9
The Weekly Jobless Claims report due at 08:30 on Thursday, September 10
The Producer Price Index (PPI) for August as well as the Consumer Sentiment Report for September which is prepared by the University of Michigan are due at 8:30 and 10:00 respectively on Friday, September 11.
China has been the lead factor in financial and economic news for much of the past 4 weeks and important data is due on Tuesday and on Thursday.
Tuesday sees the release of data on the Chinese trade balance or the difference between its exports and its imports for August. Consensus expectations are for the trade surplus to increase to $48.2 billion from $43 billion in July. This would also represent an increase over the August 2014 surplus of $45.41 billion.
The forecast increase in the trade surplus is ascribed to the fact that while exports are expected to drop by 6% from August 2014, after falling by 8.3% in July, imports are expected to decline by 8.2% compared to the 8.1% fall in July 2015.
The other reports due from China are the consumer and producer price inflation numbers. While the consumer numbers are expected to show an increase in inflation of 1.8% for August, producer price inflation is expected to fall by 5.5%, the 41st successive month that the PPI reading would fall since October 2009 as well its worst number since 2009.
Market turmoil during recent weeks was sparked by the devaluation of the yuan by the Chinese government and this has led to fears that the economic slowdown in that country is happening more rapidly than had been expected.
Meanwhile, the Bank of England will report on its Monetary Policy Committee meeting at 07:00 Eastern Time on Thursday, with analysts expecting no change in the interest rate which is at a record low of 0.5%. No change is expected until mid-2016.
Also, the Bank of Canada will release its latest interest rate decision on Thursday at 10:00 Eastern Time and the expectation is that rates will remain unchanged following the 0.25% cut to 0.50% at its previous meeting in July.
Canada is currently in a technical recession after recording a negative GDP for the past two months in a row and this should be of concern to investors. Canadian imports from the U.S. for 2014 were $312.4 billion while its exports to the U.S. were $347.7 billion in the same period. Year to date to end June 2015, U.S. exports to Canada have dropped by 7% while Canadian exports to the U.S. have declined by 13% which should be cause for concern to both economies.