Economic Analysis

February 04, 2017

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.

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.

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 is the total value of all goods and services produced within a country.