Which are the economic indicators that macroeconomic analysts control every time to study their own strategy. The results of one or more indicators suggest an improvement or a worsening of the economic situation and they are useful in determining future trading strategy on a cross.
High volatility situations may occur in the market after the publication of a macroeconomic data.
We always talk about market movers and how the publication of certain data influences the currency market.
Market movers are the key factors that move the market and therefore affect the formulation of fundamental analysis also know as macroeconomic analysis. A market mover can be represented by any news that has a direct or indirect impact on a market.
Market Movers can be grouped into three main groups:
- Economic Indicators: data and indicators relating to the performance of a country’s economy such as gross domestic product, labor market, real estate, etc.;
- Financial Indicators: data concerning the activity of Central Banks (interest rate decisions, inflation, etc.);
- Political Factors: any political event, such as elections, which may affect or determine the market’s performance.
Among economic data we distinguish microeconomic and macroeconomic data. Microeconomic data refers to the study of the costs and benefits of a single company, or a single consumer. The seconds measure some of the most important parameters of a nation economy.
All major events and economic indicators are listed weekly on the economic calendar.
The study of macroeconomics is very complex and fascinating at the same time, because several factors can influence a data, often based on the expectations of growth or future production. These data are not only used for trading, but they are considered by national governments to take important decisions such as monetary and economic policy.
Here is a list of key macroeconomic data to keep an eye on whenever they are scheduled on the economic calendar.
Gross Domestic Product (GDP)
GDP is the most important figure describing the growth of a nation and its present and future economic situation. It is published on a quarterly basis and represents the sum of all the goods and services produced by the nation over a year.
A positive GDP means the economy is healthy. If the GDP is negative, or it stands at 0, it can witness a country’s recession: as a result its currency will be extremely weak in the market, otherwise its currency will grow.
Employment data provides information on a country labour market. This figure shows how many jobs have been lost, how many people have been hired and how many people are claiming for unemployment benefit.
Generally, when an economy is growing, the real GDP value rises and unemployment figures stand low. On the contrary, at a time of economic stagnation, production decreases and consequently the demand for employment.
The inflation rate is another important macroeconomic indicator. This value is measured through the Consumer Price Index and the GDP deflator.
The Consumer Price Index measures the change in retail prices of goods and services over a given period of time. The GDP deflator is equivalent to the measurement between nominal and real GDP. If nominal GDP is higher than real GDP, there is a price increase in the market.
Inflation is related to the purchasing power of a currency and affects its exchange value in proportion to other currencies. If the economy is under development, the Consumer Price Index increases and interest rates are rising. The currency, therefore, acquires a higher value.
Balance of Payments
The Trade Balance indicates the difference between foreign currency revenue and output against national currency. It is determined jointly by the “import-export” balance and the capital movements. When the inflows are higher than the outflows, the balance is positive, the economy is strong and the national currency strengthens.
For a perfect macroeconomic analysis, the data to consider are not a few. They are very important to study a proper forex trading strategy.
Do not forget to consult the economic calendar and analyze the data before taking any decision.