Forex Economic Indicators

The Main Forex Economic Indicators

Current Account (Current Account)

It includes all capital flows to and from the state. The positive balance on current account means that the country’s capital flows. This situation may contribute to the strengthening of national currency.

Gross domestic product (GDP)

It measures the total value of goods and services produced in its territory. When calculating this indicator takes into account all economic activity, regardless of the nationality of the owner of a production factor. The level is measured as GDP at current prices, which reflects the current, market value of production and prices stable, which allows to evaluate the dynamics of economic growth in the state. Financial markets carefully analyze published quarterly changes in gross domestic product last year. If the dynamics of economic development of the state higher than expected, it can lead to the strengthening of national currency on the international market.

Producer Price Index (PPI Production Price Index)

Measured dynamics of changes in prices of goods offered by manufacturers and farmers. The attention of financial markets is concentrated on the published monthly percentage changes in prices of final goods – however due to the highly seasonal nature of food prices and high volatility of energy prices, these factors when interpreting often ignore (so-called core inflation – core PPI rate). Strong growth of the indicator, and increased inflationary expectations may be perceived negatively by investors, causing a weakening national currency.

IFO (IFO Business Sentiment)

Indicator processed economic institute in Munich that shows the mood among German industrialists. Monthly survey involved about 7000 economic units. Analysts of the financial markets attach great importance to the performance indicators: they perceive it as a measure of fitness representative for the whole euro area. IFO index increase reflects the growth and prosperity may indicate a tendency to strengthen the common European currency.

Index of the Institute for Supply Management (ISM)

The index takes into account five indicators: new orders, production, deliveries, inventories and employment. The result of more than 50% shows the development of production and the economy. Data at 45% -50% express stagnation in industrial production, while developing economies. If the indicator value is less than 40%, meaning both stagnation of industry and economy-wide stagnation. Financial markets attach great importance to the ISM index due to its fundamental impact on the monetary policy of the Federal Reserve System.

Index of sales of newly built houses (New Home Sales)

Given the indicator expresses the number of newly built houses that have been sold or offered for sale. Changes in the levels reflect the dynamics of boom in the U.S. housing market. High dynamics is typical for the period of economic recovery, while a decrease reflects the saturation of demand and the possible onset of economic stagnation.

Index of Industrial Production (Industrial Production)

Specifies the aggregate rate of growth, level of physical production. High dynamics of production shows a good condition and can lead the economy to strengthen the currency markets. Low dynamic contrast is a sign of the unfavorable “economic” situation and leads to the fact that investors abandon the currency.

Consumer price index (CPI Consumer Price Index)

It expresses the constant price of market basket of consumer goods and services without seasonal influence. Financial markets tend to turn away from countries with rising inflation. Growth index leads to an increase in interest rates, a drop in prices on the market for bonds nominated in that currency. Sale of bonds by foreign investors in fear of the rise in interest rates, for example in the U.S., may lead to a supply growth and the dollar’s depreciation against other currencies.

Index of consumer confidence (Conference Board Consumer Confidence)

Its importance is close to University of Michigan index, however, involves a larger group of survey respondents. Prevailing mood among consumers reflect the state of economic boom. During growth, there is optimism. Recession will accompany the pessimistic sentiment, expressed by lower values ​​of this indicator. The good mood of American consumers is increasing demand, more revenue and business community to strengthen the dollar. Decline in the index is reflected in the weakening U.S. currency.

Index of consumer sentiment University of Michigan (University of Michigan Consumer Sentiment Index)

This index, published monthly, is an important indicator of prevailing sentiment among consumers and prospects for further economic development in the U.S.. Its value has an impact evaluation of the current situation and expectations of respondents associated with future economic conditions. The survey is done by phone, involved 700 households in it. Weight Index, University of Michigan stems from the fact that consumer spending is the most important factor shaping the size of gross domestic product. If the data exceeds the value of the index market expectations can contribute to the strengthening of the dollar, while the worse result than expected, may cause a weakening U.S. currency.

Trade Balance (Trade Balance)

Presents an overview of export values ​​of goods and services exported beyond the boundaries of state and import – imported from abroad. The difference between the value of exports and imports of the country consists of trade balance. If a positive value, it indicates superiority of exports over imports, and its amount determines the country’s economic strength. The high competitiveness of the economy can increase investor interest in the currency.

The unemployment rate (Unemployment Rate)

The level of unemployment is one of the most important indicators that indicate the condition of the economy. The published unemployment rate of unemployment includes both natural, ie voluntary, so the real unemployment, skills mismatch resulting from the labor force, labor market needs and little demand, and also shows frictional unemployment. Continuous growth of the level of unemployment is a manifestation of the worsening economic situation of the state that financial markets are perceived negatively and becomes a signal departure from the currency.

Orders of durable goods (Durable Goods Orders)

Specifies the value of durable goods orders, expressed in U.S. dollars (depreciation over three years). The volume of orders is one of the most important indices that describe the state of the industry. The values ​​of the indicators are highly variable and often verified, but its publication may significantly affect the financial markets and lead to fundamental changes in prices if the results and expectations diverge.

Growth in the number of employees outside agriculture (nonfarm Payrolls)

Like unemployment, this indicator reflects the economic condition of the country.Permanent employment growth leads to increased economic climate, growth of household income and – in the longer term – the value of businesses. High values ​​of the index are a positive signal and may contribute to the strengthening of the currency of the State.

Started construction and building permits issued (Housing Starts and Building Permits)

The indicator is published monthly and the relative increase in new construction and building permits investment in the property market in the U.S.. Their level depends in part on interest rate mortgage loan. Good boom in the property market reflects the economic development of the country.

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