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Preparing for the Week of Economic Announcements |
| | | After mostly bullish sentiment on the US economy, markets and the Dollar in early May, last week investors seemed to pull back on their optimism, as the market contracted and the US dollar lost ground against the majors. 
Now we're faced with the week ahead, which holds a plethora of significant economic reports and announcements which could have a major impact on the direction of the markets and the USD over the next 30 days and beyond.
This is also a good opportunity to discuss the folly that inevitably comes from short-term "Trading the News."
Tuesday: Consumer Confidence
Economists are mixed on consumer confidence expectations this month, after last month showed a surprise jump in the index and led to a nice bump in US equities.
But the surprise of last month is a good example why it's foolish to attempt to day-trade this announcement. However, this number will be a good gauge of sentiment for the US dollar for the next 30 days, so a good number could lead to moves away from USD backed investments into less predictable opportunities like stocks.
Read Translating the Consumer Confidence Report for more on this announcement.
Wednesday: Existing Home Sales
There's not a whole lot of optimism for this economic announcement to make a big wave. While housing and real estate sentiment has been creeping up lately, don't be fooled too easily. The existing home sales numbers are benefiting from a wave of short-selling, and general dumping of properties by owners. Right now, the better indicator is likely the one more closely tied to banking: Foreclusures.
Thursday
Durable Goods: Once a month, the U.S. Census Bureau gives us a glimpse into what the future demand for big ticket items is going to be by releasing its Durable Goods numbers. Traders love this information because consumers only buy durable goods when they are confident in the economy and in their ability to pay for the big-ticket items. The more durable goods consumers are purchasing, the stronger the economy is and the higher stock prices will typically go. Learn more about durable goods and trading around the announcement.
New Home Sales: This number can actually be considered similar to the Durable Goods numbers. New homes are like the most expensive durable good (sort of, but you get my point). When Americans are buying/starting new homes, this tends to show strength in sentiment, employment and overall consumerism. Right now 22% of American Homeowners owe more than their home is worth.
Unemployment Claims: This number is often misunderstood. But quite simply, it's a measure of the number of new people filing for unemployment benefits in the previous week. The number in this case isn't as important as the change and the trend. Oddly enough, bad employment numbers can actually strengthen the US Dollar. Why is that? Click to learn more about the US Dollar and Unemplyment.
Friday: Preliminary GDP, quarter over quarter
Once a quarter, the Bureau of Economic Analysis gives us a glimpse into the state of the U.S. economy by releasing its Advance Gross Domestic Product (GDP) numbers. Traders love this information because as goes the economy so goes the stock market.  The higher the Advance GDP number, the stronger the economy is and the higher stock prices will typically go. Learn more about how traders can use the Advance GDP data.
See pair-by-pair charts, analysis and data by clicking on the flags
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