The last couple days I have been mentoring one of our Students on trading stocks, options, currencies, and commodities. In doing so we have been researching and studying the impact of economic reports on both the stock market and the dollar index. Economic reports are the number one driver of all market activity, especially in the forex market. As a US based stock/options trader, one only needs to really understand US reports so I had her simply research US based reports.

However, as many of you are starting to understand after watching as many Forex Reports as you have, projecting a week in the forex market is about as difficult as it gets in trading due to not only US based reports but all the other major currency economic reports as well as this is the true global market. We will work on this eventually as well but before you can master European reports or Australian reports one must master the #1 stock market and currency reports in the United States Dollar:

Actual Number = Positive or Negative is based on the expectation and not whether or not it is good for the economy.

Below is her research.

Aug 3: ISM Manufacturing PMI:           Actual Number           /ES           /DX
Negative                   -5.73        -0.185

Aug 5: ADP Non-Farm                             Negative                   +7.5          -0.355

Trade Balance                                            Negative Same time as Non-farm so included in the prior numbers

ISM Non-Manufacturing PMI                 Positive                    +4.5           + 0.38

Aug 6: Unemployment Claims                 Positive                    -3.25          +0.12

Aug 7: Unemployment Rate                     Same                        +7               +0.58
Average Earnings                           Same
Non-Farm Employment               Negative

Aug 11: Prelim Unit Labor Costs            Positive                     -7.5             -0.15

Aug 13: Retail Sales                                  Same                         -5.75           +0.285
Core Retail Sales                         Same
Unemployment Claims              Negative

Aug 14: PPI M/M                                    Positive                     +2                +0.19
Consumer Confidence               Negative                    -4                +0.225

Aug 18: Building Permits                        Negative                    +3.25           +0.21

Aug 19: CPI                                              Negative                     +2.50           +0.14

Aug 19: FOMC Meeting Minutes          N/A                             +8.25           -0.41

Aug 20: Unemployment Claims            Negative                     +4.5             +0.11

Aug 20: Existing Home Sales                 Positive                      -8.5              -0.36
Philly FED Manu                       Positive

Aug 25: CB Consumer Confidence         Positive                      -8.5              +0.41

Aug 25: Core Durable Goods                  Positive                      +19.5           +0.325

Aug 27: Prelim GDP                                 Positive                      +10.75        +0.48
Unemployment Claims              Positive

Aug 28: Goods Trade Balance                No Forecast                +5.75          +0.1

Take Away

1) Currencies are more correlated to the economic report than the stock market to economic reports.

2) Despite what the FED states, inflation is not a concern for the market in August.

3) Labor, Manufacturing, and GDP were the most important (Manufacturing includes Durable Goods)

4) Bad news is good news and good news is bad news when it applies to the Labor Market, consumer behavior, and retail.

5) Thank you FED for making us research how your manipulation of the free markets impacts price action

Thoughts???

(Great work Jessica Marinho for the Research)

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