Analysis of Economic Indicators
- Economic news and political events from all over the world have strong effects on financial markets, with US data releases generally having the most effect.
- By understanding these announcements and their impacts on the market you will be able to make more informed trading decisions.
- Economic indicators present comparative statistics that provide an overview of recent and future predictions of international economic performance.
- The indicators include various indices, earnings reports, and economic summaries.
- These indicators are used by traders to make informed decisions to assist them when trading the markets.
- Interest rates are typically noted on an annual basis, known as the annual percentage rate.
- Historically higher interest rates tend to increase the demand of a currency therefore increasing its value.
- However, at the same time possibly having a negative impact on its stock market.
List of Major Economic Indicators
Non Farm Payroll
- Generally released on the first Friday of the month, this figure is the monthly number of jobs created or lost in the non farming sector.
- This is regarded as the most important economic statistic, and a wildly different figure from that expected can cause financial markets to move very quickly.
- The trade balance released by the National Statistics is a balance between exports and imports of goods.
- A positive value shows trade surplus, while a negative value shows trade deficit.
- It is an event that generates some volatility for the currency.
Producer Price Index
- The Producer Price Index released by the National Bureau of Statistics is a measurement of the rate of inflation experienced by producers.
- It captures the average changes in prices received by countries domestic producers of goods in all stages of processing.
- A high reading is seen as positive (or bullish) for the currency, whereas a low reading is seen as negative (or bearish) for the currency.
Gross Domestic Product (GDP)
Gross Domestic Product is the total value of all goods and services produced within a country.