A comprehensive measure of Canada's overall production and consumption of goods and services. GDP is a significant report in FX Market, serving as one of the primary indicators of a country's overall economic health.

Robust GDP growth signals a heightened level of economic activity and often a higher demand for the domestic currency. At the same time, economic expansion raises concerns about inflationary pressures which may prompt monetary authorities to increase interest rates. Thus positive GDP readings are generally bullish for the Canadian Dollar, while negative readings are generally bearish.

Most production reports that lead to Canadian GDP are released before the official GDP number. Therefore, actual GDP figures usually confirm expectations. However, an unexpected release can move markets due to the significance of the figure.

Technically, Gross Domestic Product is calculated in the following way:

GDP = C + I + G + (EX - IM)

where
C = private consumption
I = private investment
G = government expenditure
EX = exports of goods and services
IM = imports of goods and services

The headline figures for GDP are the percentage growth rate from the previous quarter and the annualized percentage change in GDP. Prices used are benchmarked to 1997 prices.

Comprehensive measure of how much consumers spend each month, counting expenditures on durable goods, consumer products, and services. Personal Consumption is a comprehensive measure of GDP; consequently the figure is watched as an indicator for economic trends. Spending also has direct affect on inflationary pressures.

A healthy Personal Spending figure means that consumers are buying goods and services, fueling the economy and spurring output growth. The report is particularly valued for forecasting inflationary pressures. Taken in excess these high levels of consumption and production may lead to an overall increase in prices. Indeed, the Fed uses a measure of inflation derived from the PCE as their primary gauge of inflation.

On the other hand, persistently low Personal Spending may result in decreasing levels of output and an economic downturn.

Because income is either spent or saved, Personal Spending (when reported as a percent of income rather than the headline percent change) has an inverse relationship to personal saving. Economists watch the growth of Personal Spending in relation to income and saving to determine if consumers are living beyond their means, which would influence levels of borrowing and future consumption.

The PCE figure is released in headlines as a percent change from the previous month.

Core Personal Consumption Expenditure
Volatile items like food and energy can fluctuate widely due to seasonal and non-systemic factors. In order to provide a less erratic picture of Personal Consumption, food and energy items are excluded in the PCE core report.

The headline figure of PCE is expressed in percentage change in spending for the quarter.

Note: The Personal Consumption Expenditure figure is reported with the Personal Income and Outlays figure.

The GDP for the United States is a gauge of the overall output (goods & services) of the US economy on the continental US GDP is the most comprehensive overall measure of economic output and provides key insight into the driving forces of the economy.

GDP Influence On Markets
If the figure increases, then the economy is improving, and thus the dollar tends to strengthen. If the number falls short of expectations or meets the consensus, dollar bearishness may be triggered. This sort of reaction is again tied to interest rates, as traders expect an accelerating economy, consumers will be affected by inflation and consequently interest rates will rise. However, much like the CPI, a negative change in GDP is more difficult to trade; just because the pace of growth has slowed does not mean it has deteriorated. On the other hand, a better than expected number will usually result in the dollar rising as it implicates that a quickly expanding economy will sooner or later require higher interest rates to keep inflation in check. Overall though, the GDP has fallen in significance and its ability to move markets since most of the components of the report are known in advance

Due to the untimeliness of this report and because data on GDP components are available beforehand, the actual GDP figure is usually well anticipated. But given its overall significance GDP has the tendency to move the market upon release, acting to confirm or upset economic expectations. Robust GDP growth signals a heightened level of activity that is generally associated with a healthy economy. However economic expansion also raises concerns about inflationary pressures which may lead to monetary policy tightening.

Gross Domestic Product is calculated in the following way
GDP = C + I + G + (EX - IM)
where
C = private consumption
I = private investment
G = government expenditure
EX = exports of goods and services
IM = imports of goods and services

The figure is commonly reported in headlines as an annualized percentage, based on quarterly data.

On a technical note: The GDP can be reported in either real or nominal terms, real GDP being adjusted for inflation. GDP actually has three releases, as an Advanced, Preliminary, and Final figure. The Advanced figure is released four weeks following the quarter's end. One month later, the Preliminary GDP is released, followed by the Final GDP measure at the end of the quarter following the reporting quarter. As the most timely measure, the Advanced GDP tends to move markets the most.

The headline inflation gauge for Australia. Simply put, inflation reflects a decline in the purchasing power of the Aussie Dollar, where each Dollar buys fewer goods and services. In terms of measuring inflation, CPI is the most obvious way to quantify changes in purchasing power. The report tracks changes in the price of a basket of goods and services that is typically bought by a metropolitan Australian households. An increase in the index indicates that it takes more Australian Dollars to purchase this same set of basic consumer items.

Unlike most other countries, Australia publishes CPI quarterly instead of monthly, increasing the market impact of the report upon release. The headline number is released as the percentage change from the previous quarter or year.

National Consumer Price Index (CPI) is the key gauge for inflation in Japan. Simply put, inflation reflects a decline in the purchasing power of the Yen, where each Yen buys fewer goods and services. In terms of measuring inflation, CPI is the most obvious way to quantify changes in purchasing power. The report tracks changes in the price of a basket of goods and services that a typical Japanese household might purchase. An increase in the index indicates that it takes more Yen to purchase this same set of basic consumer items.

Markets will typically pay more attention to "CPI excluding Fresh Food," because it excludes volatile food prices that can distort overall CPI. The headline figure for CPI is the percentage change in the index on a month to month or year to year basis.

As the most important indicator of inflation, CPI figures are closely followed by the Bank of Japan. Rising Consumer Prices may prompt the BoJ to raise interest rates in order to manage inflation and slow economic growth. Higher interest rates make holding the Yen more attractive to foreign investors, and this higher level of demand will place upward pressure on the value of the Yen.

The percentage of individuals in the labor force who are without a job but actively seeking one. A higher Unemployment Rate is generally a drain on the economy. Not only does it mean that resources are not being fully utilized, but it also results in lower consumer spending as there are fewer workers receiving paychecks.

Note: The unemployment rate generally moves slowly, so changes of only a few tenths of a percent are still considered significant. Also note that the unemployment rate does not account for discouraged workers. Therefore, in an economically depressed environment, such as that which occurred in Cold War era East Germany, the Unemployment Rate may not accurately reflect the extent of problems.

Tracks the number of the employed in Australia . The figure appears in the monthly Labour Force Survey conducted by the Australian Bureau of Statistics. A surge in new employment suggests higher spending potential and budding inflation pressures, which the RBA often counters with rate increases.

The headline figure is the annualized percentage change in employed workers.