Week Ahead: Economic Indicators (Europe)

Hey, Traders!
For the September 29th week, here is a list of all of the major economic indicators being released during the EU Session, with a brief synopsis of what they represent and what to possibly expect from the markets in reaction.

Tuesday
UK GDP
Gross domestic product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.
GDP is the broadest measure of aggregate economic activity and encompasses every sector of the economy.
What to expect:
Bond or fixed income markets are contrarians. They prefer weak growth so that there is less of a chance of higher central bank interest rates and inflation. When GDP growth is poor or negative it indicates negative economic activity. Bond prices will rise and interest rates will fall. When growth is positive and good, interest rates will be higher and bond prices lower. Currency traders prefer healthy growth and higher interest rates. Both lead to increased demand for a local currency. However, inflationary pressures put pressure on a currency regardless of growth.

German Employment
The Unemployment Change released by the Bundesagentur für Arbeit and published by the German Statistics Office is a measure of the absolute change in the number of unemployed people in Germany using seasonally adjusted data. The unemployment rate is calculated by the Federal Employment Agency based on the number of unemployed persons as a percentage of the number of all civilian members of the labour force (dependant civilian employed persons, the self-employed family workers and unemployed). Unemployed is defined as persons between the ages of 15 and 65 and who are without employment or only with short-time employment (currently less than 15 hours per week) and seeking employment of at least 15 hours per week subject to compulsory insurance.
What to expect:
A rise in this indicator has negative implications for consumer spending, as there’s less people working and therefore diminishes economic growth in the country. Generally, a reading above expected is seen as negative for the EUR, while a low reading is seen as positive.

French & German CPI
The consumer price index (CPI) is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly and annual changes in the CPI represent the main rates of inflation. The national CPI is released alongside the HICP, Eurostat’s harmonized measure of consumer prices. A flash estimate was released for the first time in January 2016 and is now published towards the end of each reference month.
What to expect:
A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.

Wednesday
Eurozone CPI
The consumer price index (CPI) is an average measure of the level of the prices of goods and services bought for the purpose of consumption by the vast majority of households.
What to expect:
Over the long run, the bond market will rally when increases in the CPI are small. The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits. A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.

French, German, Eurozone & UK Manufacturing PMI
The Manufacturing Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the manufacturing sector. A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Traders watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.
What to expect:
A reading above 50 signals rising activity versus the previous month and the closer to zero the faster is activity contracting. The data are compiled by the Chartered Institute of Purchasing and Supply and Markit.
A higher than expected reading should be taken as bullish for the GBP/EUR, while a lower than expected reading should be taken as bearish for the GBP/EUR.

Thursday
Swiss CPI
The consumer price index (CPI) is an average measure of the level of the prices of goods and services bought for the purpose of consumption by the vast majority of households.
What to expect:
A higher than expected reading should be taken as positive/bullish for the CHF, while a lower than expected reading should be taken as negative/bearish for the CHF.

Eurozone Unemployment
The Unemployment Change s a measure of the absolute change in the number of unemployed people in Germany using seasonally adjusted data. The unemployment rate is calculated based on the number of unemployed persons as a percentage of the number of all civilian members of the labour force (dependant civilian employed persons, the self-employed family workers and unemployed). Unemployed is defined as persons between the ages of 15 and 65 and who are without employment or only with short-time employment (currently less than 15 hours per week) and seeking employment of at least 15 hours per week subject to compulsory insurance.
What to expect:
A rise in this indicator has negative implications for consumer spending, as there’s less people working and therefore diminishes economic growth in the country. Generally, a reading above expected is seen as negative for the EUR, while a low reading is seen as positive.

Friday
French, German, Eurozone & UK PMI’s
Services
The Services Purchasing Managers’ Index (PMI) provides an estimate of service sector business activity for the preceding month by using information obtained from a representative sector survey incorporating transport and communication, financial intermediation, business services, personal services, computing and IT and hotels and restaurants. Results are compiled into a single index which can range between zero and 100.
Composite
The Composite PMI Index measures the activity level of purchasing managers in both sectors (manufacturing and services).
What to expect:
A reading above 50 signals rising activity versus the previous month and the closer to zero the faster is activity contracting. The data are compiled by the Chartered Institute of Purchasing and Supply and Markit.
A higher than expected reading should be taken as bullish for the GBP/EUR, while a lower than expected reading should be taken as bearish for the GBP/EUR.