The Top Five Economic Indicators that Drive the Forex Market

1. State of Economy and Current Events

Specific factors such as housing statistics, unemployment data, and the current state of the government could all affect the forex market. Once the country is feeling positive about its present affairs, it will reflect on the market. If a nation is currently at a political unrest, the currency value will also be affected.

2. Gross Domestic Product (GDP)

The GDP is regarded as the widest indicator to measure the economy of a country. It represents the total market value of all goods and services, which are produced in one year. Take note that the GDP is not the only indicator used in making forecasts in forex. In fact, it is considered as a lagging indicator, which means that it is a measurable indicator that could change once the economy has started following a specific trend. His indicator refers to the total receipt of all retail stores in the country. This measurement usually doesn’t refer to the gross receipt of every single retail sale, but only a sample of various retail stores. This is regarded as a reliable and key economic indicator because of the consumer spending habits that can be predicted throughout the year.

3. Retail Sales Reports

TEconomic indicators are important data released by the government or non-government agencies which can help a forex trader take a closer look at the economic performance of the country. These economic indicators could measure the country’s economic status, aside from current events and government policies.

More often than not, you can study the economic indicators and you will determine which currencies to trade. Indicator reports are released on fixed schedules and could help you figure out if the country is experiencing considerable economic improvement or if the economy is declining.

The top 5 economic indicators that drive the forex market are as follows:

4. Industrial Production Report

This report indicates the fluctuation in production in different industries such as utilities and factories. The report shows the actual production, as regards the production capacity potential over a certain period of time.

5. Consumer Price Index (CPI)

CPI refers to the measurement of change in the prices of consumer goods in almost 200 categories. This report can indicate if the country is making or losing money on their products and services. The country’s exports are also crucial because the value of exports could reflect the weakness or strength of the currency.

Source: MTrading Philippines