Despite the popularity of technical analysis techniques, fundamental analysis can not be underestimated. We understand how difficult it is to follow almost every minute the economic, political and social spheres of the countries of the world. Therefore, we suggest that you identify only the most basic economic indicators, which for certain may not be of paramount importance for making a trading decision, but at least insure.
Discount rate. In essence, this is the value of the national currency set by the Central Bank. That is, the rate at which commercial banks receive financing. Its increase may have different consequences depending on other indicators and time frames. Has a strong influence. In addition to the discount rate, the weaker indicators are the interest and discount rates.
Report on GDP. It represents data on all goods and services that were produced in the country by both national producers and foreign investors during the reporting period. The indicator is calculated, for example, in the USA on a quarterly basis with the possibility of subsequent revision of the information. The impact on the exchange rate is direct and high, since a positive trend and a sharp jump instantly affect the movement of the exchange rate.
Consumer price index. Displays the degree of depreciation of the national currency. The comparative basket includes goods and services that are most important in the life of the population (food, fuel, household items, etc.). The effect on exchange rates is strong. The excess of this index of normative indicators (moderate inflation is considered positive for the economy) indicates problems in the country.
Producer Price Index. Displays the percentage change in prices for goods produced by national manufacturers, covering all stages of production. Published monthly, has a weak effect on the foreign exchange market, because it does not fully reflect the entire situation in the economy. For example, the scope of services in this indicator is not included.
Trade balance. The indicator with a strong influence on the exchange rate. The ratio of imports and exports, as well as the budget deficit directly form the value of the national currency. In the US, published monthly. Unemployment rate. One of the most influential indicators for developed countries. For countries with transitional economies, this indicator may be ineffective because it will not reflect the real situation of the shadow business.
The index of business activity. It has an average impact on the market. A monthly published indicator is generated by a competent research center based on a survey of professional employees in the industrial sector.
Now you know some of the most important economic indicators. Thanks to them, you will be able to make a more balanced decision during the transaction, which means you will get even greater profit. Stay with us and read our next publications!