How currencies are affected by the various economic data

Some currencies are more sensitive to particular economic indicators than they are
to others. Here is my very quick guide to which major economic data releases affect
particular currencies.
Euro: PMI data for the euro zone, inflation data, German factory orders,
retail sales and sovereign debt auctions
Sterling: PMI surveys, public sector borrowing figures, retail sales, GDP and
GDP revisions. For example, the August 2012 manufacturing PMI survey
(released 3 September 2012) beat expectations, causing a sharp jump higher
in GBPUSD, as you can see in Figure 1.10. The arrow indicates the point of
the data release.

Australian dollar: Chinese PMI survey, Chinese GDP projections, domestic
terms of trade data and quarterly inflation report (Australia is unusual in that
it only releases inflation data every three months). For example, the
Australian dollar is extremely sensitive to developments in China because of
the close trade links between the two economies. When important Chinese
data is released – like GDP – it can have a big impact on the direction of
AUDUSD. Figure 1.11 shows how Chinese GDP growth in 2009 came at the
same time as a rise in AUDUSD, while moderation in Chinese GDP growth
coincided with a slowing rise in AUDUSD in the period from late 2010 to
2012.

US dollar: NFP, ISM surveys, consumer confidence, retail sales and CPI.
Yen: US NFP, domestic inflation data, the Tenkan survey of manufacturing
activity (a quarterly version of the ISM and PMI surveys) and central bank
meetings in the US and Japan.
I have covered the most important indicators that I believe you need for effective
fundamental analysis. Of course there are second, third and even fourth tier
indicators that some traders follow avidly; such as terms of trade, factory orders and
inventories. However, the purpose of this book is not to give you a step-by-step
guide to all economic data because there are plenty of other books that will do that
for you.
These include Richard Yamarone’s The Trader’s Guide to Key Economic Indicators ,
which is an easy to use and comprehensive look at most US economic indicators (but
it can be applied to indicators used in other parts of the world).
You may have noticed that I did not include interest rates – and the central banks
that set them – in the list of four economic indicators above. I like to think of these
as a cousin of the monthly economic data statistics and use them in combination
with all of the other indicators. Interest rates have a big impact on the direction of
currencies and they are worth looking at in detail, so I will move on to this next.