Economic Indicators In Forex Trading

Economic Indicators in Forex trading is too important and all traders should learn About it, Knowledge of how to analyze and interpret the Economic Indicators is important because these Economic Indicators may affect the Forex market to a great extent. These Indicators help to analyze an economy’s health. Some of the important Economic Indicators are introduced by Fxstay broker below.

Financial Economic Indicators To Use In Forex trading


GDP is the abbreviated form of Gross Domestic Product. This indicator measures the economic output. It is represented as an increase or decrease in percentage from the previous quarter. The four factors that are compiled in GDP are investment, consumption, net exports and the government purchases. A healthy ratio should be there between the national debt and GDP and the Government aims to maintain this healthy ratio. The GDP figures are given in three phases. In the first phase, comes the advance numbers then are the preliminary numbers released and the final numbers are the last to come out.

Durable Goods Orders

The quantity of the durable goods produced and sold in any given month helps the traders and investors to get an insight of the economy. This Economic Indicator is not much reliable because when the government wants to stimulate the durable goods consumption then this indicator may be artificially inflated and thus does not provide the correct signals to the success traders and investors.

Trade Balance

Trade Balance is the quantity exported and the quantity imported and this result in the changing value of currencies. Demand for the currency of a country is directly proportional to the quantity exported and demand for the currency of another country is directly proportional the quantity imported. So this Economic Indicator is only responsible for changing the value of the currencies. This is the reason why this indicator is considered as a lagging Economic Indicator.

Unemployment Rate

Higher Unemployment Rate will reduce the average personal income and lower Unemployment Rate will increase the average personal income. Average personal income will show the health of the economy.

Interest Rate

Rise of Interest Rates is good for a currency whereas drop in the Interest Rates is not good for the currency of a country.

Consumer Confidence Index (CCI)

Consumer spending results in 50% or more in most of the economies and for the US economy it is approximately two third and so it is the leading Economic Indicator. Consumer Confidence Index is published once in every month. The abbreviated form of the Consumer Confidence Index is CCI. CCI is a huge survey of approximately 5,000 American consumers that is done to predict the movement of the economy.

NFP or Non-Farm Employment Change

Population is increasing in every country and so the jobs in the country should also increase to keep the unemployment rate lower. For example, 125,000 jobs are added in US every month and if this figure is not reached then it is considered as a bad news. So the traders and investors watch non farm employment change, predict revisions of previous release and look at this figure before release because the market prices depend on these figures and it will has high effect on your real Forex account.

ADP Non-Farm Employment Change

ADP Non-Farm Employment Change attempts to estimate the previous day’s release of the Non-Farm Payrolls. Positive results are expected to erase the losses occurring from the previous trading sessions. It helps to accurately estimate the short term movements with in time in the market.

ISM Manufacturing PMI

PMI is the abbreviated form of Purchasing Managers Index and ISM is the abbreviated form of Institute of Supply Management. PMI is an economic indicator that represents the economic strength of the manufacturing sector. PMI index depends on the five major indicators and these are new order, production, inventory levels, deliveries of suppliers and the last is employment environment. In the manufacturing sector, if PMI is greater than 50 then it represents expansion, if PMI is less than 50 then it represents contract and the PM of exact 50 represents no change.

ISM Non-Manufacturing PMI

This indicator is not as popular as ISM Manufacturing PMI but still it has gained more popularity in less time. Many top analysts have accepted ISM Non-Manufacturing PMI because of its original survey format and the breadth of coverage. It is a timely indicator.

Retail Sales

Retail Sales is the total of all in-store sales and out-of-store sales. Figures of Retail Sales are important to the traders and investors because these figures form a major component of total GDP. Retail Sales is a broad Economic Indicator that is used to provide data with in time. The report of Retail Sales is covers the sales of previous month and is published in 2 weeks after the end of the month. Retail Sales is a monthly Economic Indicator that release report every month. This report is released by the Department of Commerce and the Census Bureau. This report measures the Retail Sales of Retail Goods over a fixed period of time. you can learn more Forex economic indicators in our online currency trading school .