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ECONOMIC
INDICATORS
ANALAYSIS |
Economic Indicators analysis is the examination of the underlying forces that affect the interests of the economy, industrial sectors and companies. As with most analysis, the goal is to derive a forecast for the future. Learning the monthly sequence of economic releases and market reaction to each release is one of the first steps in learning to track the economy. Forex traders should be taught to compare market expectations with actual economic indicators and then evaluate market reactions. It's the difference between market expectations for an economic release and the actual release number that primarily affect market movement.
Currency prices reflect the balance of supply and demand for currencies. Two primary factors affecting supply and demand are interest rates and the overall strength of the economy. Economic indicators such as GDP, foreign investment and the trade balance reflect the general health of an economy and are therefore responsible for the underlying shifts in supply and demand for that currency. There is a tremendous amount of data released at regular intervals, some of which is more important than others. Data related to interest rates and international trade is looked at the closest.
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RECOMMENDED
BOOKS |
Handbook of Key Economic Indicators
by R. Mark Rogers
This handbook is geared to analysts and traders who need quick access to data relating to key U.S. economic indicators. It considers what indicators mean and how they are calculated, compiled, and reported to enhance informed financial decision making. Employment. . .Inflation. . .Consumer Spending. Each month, financial markets react to these and other important figures. The data, tables, charts, and graphs in this authoritative book explain how each indicator is determined, and how readers can effectively use this information. New sections include employment and labor figures, new GDP measures, and much more.
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The Atlas of Economic Indicators
by W. Stansbury Carnes
Useful for professional and individual investors, executives or business students--a unique atlas of what makes the markets move. Developed from a popular in-house pamphlet used at Shearson Lehman, this accessible and thoroughly illustrated resource makes understanding economic indicators much simpler. Charts and graphs.
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Trading the Fundamentals:
The Trader's Guide to Interpreting Economic Indicators and Monetary Policy
by Micahel P. Niemira, Gerald F. Zukowski
Economic indicators and economic policy have an incredible impact on the volatile financial markets, yet it is often up to traders and investors to interpret the effects and take decisive action. Trading the Fundamentals explains the significance and market impact of all widely followed economic numbers, including the Consumer Price Index, Employment Report and other well-known indicators. Completely updated and revised to reflect today's highly computerized environment, Trading the Fundamentals provides readers with all the tools they need to analyze economic news and make appropriate investment decisions. New topics include: A new emphasis on data availability through the Internet; More detail on indicators such as layoffs and productivity; A completely overhauled discussion of Federal Reserve policy; A discussion of the phases of the business expansion part of the cycle.
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| U.S. KEY ECONOMIC
INDICATORS |
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Forex,
or FX, stands for the foreign exchange market. This is a 24-hour market
in which currencies are traded in cash, which is known as a spot market.
There is no central, standard trading center, such as, a stock exchange.
Instead, trade is conducted "over-the-counter" via an international
network of dealers. Until recently, the forex market was confined to
larger traders: major, international commercial and investment banks;
international corporations; international money brokers; currency
traders. When the United States went off the gold standard in 1971,
investors immediately recognized new opportunities for making profits.
Every year, more companies start up that cater to smaller institutions
and investors so they may participate in spot forex trading.
A prime factor to take into account before participating in the spot
market is your temperament. A risk-aversive customer is not suitable for
this marketplace. You should consider not only your experience in the
investment world, but your objectives, and your capacity to absorb
financial losses. Certainly, you should never invest any amount of money
you cannot afford to lose.
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