• Tweet

• Tweet

Forex Economic Indicators

Forex Economic Indicators can be valuable and reliable reports that are assembled by the government, universities, and the private sectors of business.  They help measure the economic health of the overall economy, and the economic performance from any country can be analyzed by these indicators. The economic reports measure a country’s economic health, in addition to government policies and current events. Factors such as unemployment numbers, housing statistics, and the current state of a country’s government can all impact the Forex.

There are 28 Major ‘Economic Indicators’ – but we’re only going to give you a sampling here.

Most of the ‘Economic Indicators’ are monthly reports – some of course are weekly.

Generally, the Market, as a whole, listens very carefully to the results to determine whether they are ‘net buyers’ or ‘net sellers’ for the day.

Whenever a report is released, you need to at least be aware of the time and information given.  It can change (sometimes dramatically) the price direction, depending on how the Market interprets it.  You must also understand that not all of these ‘Economic Indicators’ are important all of the time, so you must learn them (at least pay attention to them) and observe the reactions they have on the market when they’re released.  And also realize that their importance changes with time and the Market’s perception of them.

Here is just a small sampling of the ‘Economic Indicators’ listed below:

•  Consumer Price Index (CPI): CPI is a measurement of the cost of living determined by the U.S. Bureau of Labor Statistics.  CPI is a widely followed inflation indicator.  It is designed to compare relative price changes over time for a fixed basket of goods and services used by consumers.  The CPI has the potential of overstating inflation because it does not adjust for substitution of goods and rapidly changing prices of new technology.
Release Schedule: Monthly – around the 13^th at 8:30am EST

•  Industrial Production (IP): A chain-weighted measure of the change in the production of the nation’s factories, mines and utilities. Industrial production also measures the country’s industrial capacity and how fully it’s being used. It should be noted that the manufacturing sector accounts for at least one-quarter of the major currencies’ economies, so it is important to observe the wellbeing of factories, and whether their capacity is being used to its fullest extent.

•   Purchasing Managers Index (PMI): The National Association of Purchasing Managers, now called the Institute for Supply Management, releases a monthly composite index of national manufacturing conditions. This index includes data on everything from new orders and production to employment and export and import orders.

•  Producer Price Index (PPI): PPI measures the average change over time of wholesale prices received by domestic producers for their output.  This index has several components:  commodity, industry sector, and stage of processing.  The U.S. Bureau of Labor Statistics produces the PPI.

Release Schedule: Monthly – around the 11^th of each month at 8:30am EST.

•  Gross Domestic Product (GDP): Provides the total value of goods and services produced within the borders of the U.S. Real GDP is the most comprehensive measure of U.S. economic activity.  The change in output is measured in real terms (inflation has been removed).  Released by the U.S. Department of Commerce, Bureau of Economic Analysis.

Release Schedule: Quarterly, during the 3^rd or 4^th week of the month following the previous quarter at 8:30am EST.

•  M2 – Money Supply: A measure of the United States’ supply of money, including M1 (currency in circulation, demand deposits, nonblank traveler’s checks, and other checking deposits) plus money market funds, savings accounts, overnight Eurodollars and time deposits under $100,000.  Provided by the Board of Governors of the Federal Reserve System.

Release Schedule: Weekly and Monthly.

•  Employment Report: The Employment Report(s) are the most timely and broad indicator of economic activity.  It provides results for two separate reports.  A household survey generates an unemployment rate, and a business survey determines non-farm payrolls, average workweek and average hourly earnings figures.  Provided by the U.S. Department of Labor, Bureau of Labor Statistics.

Release Schedule: First Friday of the month at 8:30am EST.

•  Institute of Supply Management (ISM) (formerly the National Association of Purchasing Managers Report):  Results of a national survey of purchasing managers that includes data on items such as new orders, production, employment, inventories, prices, import orders, and delivery times.  A reading above 50% indicates expansion and below 50% contraction.  This particular report is now split into two sections.  The first is for goods and raw materials and the second reports the purchases of services.

Release Schedule: The first business day of the month for the prior month at 10:00am EST.

These again are just a few of the 28 Major Economic Indicators. You may want to anticipate each announcement before entering into a trade, but that’s up to you.  We just think you should at least be aware of them and what they are.