Forex News Fundamentals / Highly Affecting Economic Market Data – Part 3
As a continuation of the previous article, let’s continue to add knowledge about fundamental news or important economic data that affect the dynamics of financial markets, especially forex and commodities.
Average hourly earnings and average working hours per week (average workweek sheet)
After discussing nonfarm payroll and unemployment rate data, in one unity report of the Ministry of Manpower of the United States or Labor Department there is data average hourly earnings and average workweek sheets that must still be taken into account because it greatly affects the performance of the manufacturing industry sector or manufacturer.
Working hours per week and the amount of hourly wage is very important to learn because both data is one of the macroeconomic indicators and determine the resources used. The quantity or amount of the two data may affect the situation in the surrounding environment and the reported country.
The logic that can be used by investors or traders to address these two data is as follows: the first assumption that can be used when the data is decreasing the amount of wages and decreasing the number of working hours compared to the previous period, it can be ascertained the state labor conditions will bring negative impact to economic and security situations that have the potential to create conditions that are not conducive.
The government as a regulator of fiscal policy will be burdened with low income and working hours. The government should provide funds to create jobs or provide some kind of incentive or business capital assistance so that they can be self-sufficient in providing daily necessities such as opening a shop or a grocery store.
For the central bank as a monetary policy regulator, activities to be undertaken are like lowering interest rates. The purpose of lowering interest rates or loosening monetary policy (the super-loose monetary policy) with the aim of reducing the interest rate of investment credit and lower the value of its currency so that business activities in the country more attractive to domestic and foreign investors.
The most important goal of the central bank is to increase domestic business so that investment activity will increase and the economy will automatically improve where the manufacturer or company or businessman needs more manpower. This is gradually a second assumption will emerge.
If this policy succeeds then the number of hourly earnings from labor and the number of hours worked per week also increases, so the second assumption will soon take shape. This second assumption is when this data improves in this period or better than the previous period.
As we know that the higher wages per hour and working hours per week, the better the economic conditions of the country. It is seen that consumer purchasing power will increase as wages and employment also rise.
Purchasing power is rising so all business lines will improve as well, retail stores are improving sales side, property sector is increasingly in demand, banks are increasing their activity because many people take consumption loans such as for home and car, the manufacturer sector will increase as new goods orders increase.
The impact of the second assumption is that the government will limit fiscal assistance such as capital incentives will be lowered so that the state budget will be transferred to other budget items. In other words, government savings are getting better.
The central bank will begin tightening its monetary policy (tightening monetary policy) if the condition is achieved. The central bank will stop the stimulus aid and start raising interest rates. With conditions like this then the value of the currency will strengthen and if this happens in the US then the US dollar will strengthen against the world’s major currencies and against gold.